The Economic Data Global Express (e-EDGE)

v.4 n.41       Released Oct. 10, 2000 
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

U.S. LABOR MARKETS TIGHTEN AGAIN IN SEPTEMBER

     The Bureau of Labor Statistics released its Employment Situation report for September, which indicated the supply of labor is still very tight.  According to the Labor Department's survey of households, the nation's unemployment rate dropped back down to 3.9% in September from 4.1% in August and 4.0% in July.  The jobless rate has continued in a generational-low range (3.9% to 4.1%) for a full year now.  September's decline was partly due to the large number of workers dropping out of the labor force and returning to school and college.  The jobless rate for teenagers fell from 14.4% in August to 12.8% in September, not far from the 12.5% registered in May before schools let out for the summer.
     Another interesting tidbit from the September survey:  about 16% of jobholders are working part-time.  Of these, some 85% are doing so for "non-economic" reasons; i.e., they are working part-time by choice and not because they couldn't find a suitable full-time position.
     Looking at the hiring side of the labor market, the government's survey of nonfarm employers reported that payrolls increased by 252,000 workers in September after falling by 91,000 in August and by 40,000 in July.  As in August, special factors distorted the September employment figures.  The federal government let go another 27,000 Census workers last month.  Also, some 87,000 Verizon strikers returned to work in September.  Netting these out, nonfarm payrolls grew by 204,000 workers in September after rising by 160,000 in August.  Hiring by the services sector accounted for most of the new jobs in both August and September, while mostover 60%-- manufacturing industries reported declining payrolls in both months.
     Manufacturing activity has clearly been shifting down in recent months, slowing the overall rate of economic growth in the U.S.  However, allowing for some statistical slippage in the summer months, labor markets remain very tight.  This economic expansion still has legs.  (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/empsit.nr0.htm
 

CONSUMER BORROWING STRONGEST SINCE MID-'90s--TROUBLE?

     Last Friday's release of consumer credit figures for August was surprisingly strong and suggests a word of caution.  Consumer credit outstanding increased by $13.4 billion in August, about $3 billion more than the consensus forecast and a huge rebound from the more quiescent July pace ($9.1 billion). Based on the first 8 months of this year, total consumer debt for all of 2000 is estimated to rise by $140 billion, surpassing 1995's record increase of $135 billion set in 1995.
     Looking at the lending side reveals that finance companies and credit unions have been the most aggressive.  On an annualized basis, in the first 8 months of the year, finance companies have seen an increase of 12.5% in their holdings of consumer loans.  Credit unions were not far behind, lending at an annual rate of 11.4%.  By contrast, commercial banks have been quite conservative, as their outstanding consumer loans have risen by 6.0% (on an annualized basis).  Savings and loan institutions have shown virtually no change between the end of 1999 and August 2000.  Revolving loans (credit cards) have been increasing at a faster clip than non-revolving credit.
     So, should we worry?  Bank regulators seem to believe that we should, given their recent  warning notices to banks encouraging tighter underwriting standards.  Also, recent surveys of senior credit officers at banks around the country indicate that their credit policy standards have been become more stringent.  The monetary officials at the Fed will also  be monitoring consumer debt positions as an important indicator of economic slowing in the months ahead.  Consumer confidence is still rising and the moderation in retail sales may not last.  Anything more than a "soft landing" next year could see debt ratios moving up and alarm bells sounding warnings of financial difficulties for both borrowers and lenders.  (Ken Ackbarali)
PR: http://www.bog.frb.fed.us/releases/G19/Current/
 

HOUSING IN AUGUST UP--SORT OF

     Permits issued in August for new housing units in California were up from the previous month and over the year, according to the Construction Industry Research Board .  However, year-to-date the state's permit total is up by just 5.3% over the comparable 1999 period.  The single family sector is flat, while the apartment sector is ahead 23.0%.
     Around Southern California, the total number of permits in Los Angeles County for 8 months is up 26.7% to 11,293, while Orange County is running 12.7% ahead at 9,575.  Riverside County is up a modest 4.8% to 10,489.  San Bernardino County, however, is running 13.4% below the year-ago level, San Diego County is off 4.7%, and Ventura County is down by 11.3%.
     In the 9-county Bay Area, the performance to date is also hit or miss.  Contra Costa County's 8-month total is running 14.1% ahead of last year's pace, while San Mateo County is up 143.0% (small base).  Everywhere else was down, resulting in a flat regional performance year-over-year.
     And which county has the largest number of housing unit permits to date in 2000?   San Diego has 11,299, Los Angeles County is right behind at 11,293, while Riverside has a count of 10,489.  (Jack Kyser)
 

NONRESIDENTIAL ACTIVITY NOT TOO SNAPPY

     Depending on your point of view, the August report on nonresidential construction in California from the Construction Industry Research Board was either good news, or bad news.  It is no surprise that retail permit values through August in every county in Southern California, except Ventura, are running ahead of last year.  The increases are "big time" in Riverside (+91.0%), San Diego (+37.7%), and Orange (+26.4%).
     On the industrial front, however, almost all areas were lagging except those stalwarts, Riverside-San Bernardino.  They were up 23.7% to $376.5 million.  San Diego County was up a modest 3.0%.  New office construction is a very mixed bag.  For 8-months of this year, Orange County is running ahead 94.7% to $258.2 million, while Riverside-San Bernardino is up 29.8%.  Ventura County has a thumping 137.8% gain, but again on a small base (8-month total of $20.2 million).
     In the 9-county Bay Area, the 8-month total for industrial building is flat, while retail is down 11.5%.  However, there is a boom in office construction, with a total of $988.6 million to date.  The hot spots are San Jose (+199.5% to $367.0 million), San Mateo County (+212.7% to $183.1 million), while San Francisco city/county has $255.5 million in office permits so far this year versus none last year.  (Jack Kyser)
 

SEPTEMBER FILM LOCATION PRODUCTION ACTIVITY--A LACKLUSTER PERFORMANCE

     The September report on film location production activity from the Entertainment Industry Development Corporation was definitely a downer.  Every category of off-lot activity -- features, commercials, TV and music -- were below the year-ago level.  Total production days were down 30.6% in September, and year-to-date are running 7.7% behind 1999.
     Commercial activity to date in 2000 is down 23.5%, no surprise given the SAG strike against commercial producers (which is now the longest on record -- 23 weeks).  However, feature film location production is off 13.3% so far.  The frantic rush in Hollywood to get features completed before May 2001 hasn't yet become evident yet in these numbers.  If you are thinking about coming west to make your fortune in films, forgedaboutit!  (Jack Kyser)
 

SMARTER SHOPPERS, BUT E-TAILERS MAY HAVE THE EDGE

     For a while many e-tailers are able to capitalize on new online shoppers that don't know all the tricks in e-tailing, but that may change this Christmas season.  Comparison shopping on the net is getting easier, and consumers are getting smarter at finding lower prices.  Sales at e-tailers are frequent as many try to establish market share and generate positive cash flow to show their investors.
     One thing to watch for is the sale of customer information beyond what's reasonable.  Traditionally, customer lists are treated as transferrable assets by companies.  Since much of that information is public anyway (name, address, etc.), few citizens ever notice the difference.  E-commerce changed all that, however.  It's now very easy to track one's purchase and site visit patterns, and thus a profile for each customer can be created to maximize the effectiveness of online ads or determine how big an incentive should be offered to the customer to induce the next purchase.  When such information is allowed to be traded, consumers will be at a severe disadvantage.  This trend can be even more anti-competitive if the sellers group together and form a central exchange.  Imagine if John Doe is profiled to be someone willing to pay $400 for a flight from LA to New York--he may never find a ticket online cheaper than $350 without using a false identity.  Consumers' privacy remains one of the most troubling aspects of the new online age.  (George Huang) 
 

QUICK STATS:

* BLS: US unemployment rate for 9/00: 3.9% (8/00: 4.1%)
* BLS: US nonfarm employment for 9/00: +252,000 (8/00: -91,000)
* Census: US new home sales for 8/00: -3.0% to 893,000 annual units (7/00: +11.8% to 921K a.u.)
* Conference Board: US Index of Leading Economic Indicators for 8/00: -0.1% (7/00: -0.2%)
* Census: US new factory orders for 8/00: +2.0% (7/00: -8.1%)
* Census: US factory shipments for 8/00: +1.0% (7/00: -1.7%)
* Federal Reserve: US consumer credit for 8/00: +10.9% annualized rate (7/00: +7.4%)

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