The Economic Data Global Express (e-EDGE)

v.4 n.50       Released Dec. 11, 2000 
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

U.S. LABOR MARKETS:  BEGINNING TO SLOW?

     The Bureau of Labor Statistics released its Employment Situation report for November on Friday.  In general, the data indicated the supply of labor in this country is still very tight but may be loosening slightly.  According to the Bureau's survey of households, the nation's unemployment rate was 4.0% in November compared to 3.9% in October and 4.1% in November 1999.  The national jobless rate has zigged and zagged up and down in the same low, narrow band (3.9% to 4.1%) for the past 14 months now.  Reversing October's pattern, higher unemployment was especially noticeable among teenagers (up by 0.5% from the previous month), Hispanics (up by 1.1%), and among those lacking a high school diploma (up by 0.3%).
     Looking at the hiring side of the labor market, the BLS survey of nonfarm employers revealed that their payrolls increased by only 94,000 workers in November, compared to monthly increases of 74,000 workers in October and 195,000 workers in September.  Hiring by the private sector has accounted for almost all of the new jobs created over the past several months, as government hiring has been negligible (perhaps as fallout of the budget gridlock).  The services and retail trade industries made the biggest additions to their payrolls last month.  Services payrolls grew by 65,000 jobs with increases spread across most of the sub-sectors.  Retail employment increased by 46,000 workers as department stores staffed up earlier than usual for the holiday season.  Manufacturing payrolls were essentially the same in November as in October.  However, the Big 3 auto companies and some of their suppliers have already announced production cutbacks for December and the first quarter of 2001; so manufacturing employment likely will decline in coming months.
     Two more significant findings of the payroll survey:  (1) over 58% of nonfarm industries reported higher employment in November than last year.  However, only 35% of manufacturing industries had more employees compared to 1999.  (2) The average hourly earnings of private nonfarm workers rose by 0.4% in November as in October.  Earnings have risen by almost 4.0% over the past 12 months, the highest such increase since early 1999 and cause for concern.  (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/empsit.nr0.htm
 

OCTOBER HOMEBUILDING DISAPPOINTING

     New homebuilding activity in California continues to disappoint.  According to the Construction Industry Research Board, the number of new housing permits issued in the state in October was down slightly, both from the previous month and over the year.  Through 10 months of 2000, the unit count was up just 4.5% over the comparable 1999 period, with the most strength found in the multi-family sector, an increase of 11.4%.
     Los Angeles County's 10-month permit total was up 23.8% over last year, and again multiple units were setting the pace.  Orange County's 10-month total was up by just 2.0% over the year, with single family activity down 13.5% and multi-family ahead 28.7%.  The Riverside-San Bernardino area's 10-month total was essentially level with last year (-0.9%), but its count of 18,339 units still easily led the state.   The story was the same as in Orange County; single family units off, but apartments up.  San Diego County's 10-month unit total was down 8.8%, with weakness in both housing segments.  Ventura County's 10-month total was off by 8.6%, with single family permits down, but multi-family permits up sharply.
     In the Bay Area, the new homebuilding situation was mixed.  The San Francisco metro area's 10-month permit total was up 19.6%, while Oakland was flat (+0.6%), and San Jose down 2.3%.  (Jack Kyser)
 

SOME SHIFTS IN NONRESIDENTIAL ACTIVITY IN OCTOBER

     After a weak start, new industrial permit valuations in Los Angeles County have finally moved into the plus column, with the 10-month total up by 3.0%.  The County's office sector still lags, down 32.2%, while retail permits were up by 13.4%.   New industrial activity in Orange County continued weak, with the 10-month value down 36.1%.  New office activity was ahead 28.2%, and retail up by 7.2%.  Nonresidential construction in the Riverside-San Bernardino area continues to steam ahead, with new industrial up by 24.4% to a 10-month total of $444 million, office was ahead 3.1%, and retail up a thumping 50.1% on a large base.
     In San Diego County, the picture was mixed, with the 10-month total for industrial down 8.3%, office off 25.2%, but retail was still running ahead by 28.8%.  In Ventura County, industrial and retail activity at the 10-month mark both continued to lag, down 8.7% and 80.9%, respectively.  Office permit values, however, were up 137.8%, although the base is small.
     In the Bay Area, the news continues to be the surge in new office construction.  For the 9 counties, the 10-month total was up 204.6% to nearly $1.5 billion.  The bulk of the action is in San Francisco and San Jose.  (Jack Kyser)
 

3RD QUARTER VACANCY RATES

     Third quarter vacancy rates are available for several real estate sectors, courtesy of the Real Estate Research Council of Southern California report.  In the office market, Los Angeles County's 3rd quarter vacancy rate inched down to 12.4%.  The West LA market was low at 6.4%, although there is some concern that the dot.com flame-out will push up rates there.  The central LA market was high at 21.2%, but some interesting leases have just been signed.  Elsewhere around the region, every other area eased down.   San Diego County had the lowest office vacancy rate, at 4.8%.  Ventura County checked in at 7.5%, with Orange County hot on its heels at 7.7%.  The Inland Empire's office vacancy rate was 14.5%.
     The Southern California industrial market continues to amaze, with every area in single digits.  San Diego County was high, with a 3rd quarter rate of 7.5%.   The Inland Empire's industrial vacancy rate was 6.9%, followed by Ventura County's 6.4% reading.  Orange County enjoyed a 5.9% rate, while Los Angeles County came in at 4.0%.  The South Bay region was low at 3.3%, followed closely by Central LA and the San Gabriel Valley, tied at 3.6%.  This all makes us cry a lot.
     Southern California's apartment market remains ultra-tight (as measured by vacancies in large complexes).  San Diego County had a 3rd quarter vacancy of 1.4%, Los Angeles County was at 2.1%, followed by Ventura County at 2.3%.  The apartment vacancy rate in Orange County was 2.9%, Riverside had 3.2%, and San Bernardino County came in at 3.4%.  (Jack Kyser)
 

HOUSING AFFORDABILITY DOWN

     Housing affordability, defined as the percentage of households that can afford to buy a median-priced home, has seen a rather dramatic decline in many parts of California, thanks to rising home prices.  California's affordability index declined to 30 in October from 37 just a year ago.  The index for Los Angeles dropped from 40 to 35 in the past year.  The index for Orange County declined from 32 to 28.  The index for Ventura County declined in line with the state, from 38 to 31.  Riverside-San Bernardino remains the most affordable area in Southern California with an index of 46, down from 51 just a year ago.  Up north, the situation is rather dire especially for the average Joe.  The affordability index for the San Francisco Bay Area was a dismal 17, down from 25 a year ago.  Santa Clara came in at 18, down from 29.  Monterey was by far the least affordable area, down from 20 to 13.  Only the top 7% of households there can afford to buy the median-priced home.  How does the public respond to increasingly expensive single-family housing?  They buy condos instead.  Does the lack of affordable housing have any serious social impacts?  This is a topic too broad for e-EDGE, but one impact close to social scientists' hearts is its impact on wealth accumulation.  LAEDC's economists also note that higher housing costs put the region at a disadvantage in attracting new firms to put down roots--factories and offices--here. (George Huang)
PR: http://www.car.org/newsstand/news/dec00-1.html
PR: http://www.car.org/newsstand/news/dec00-2.html
 

NOVEMBER LOCATION FILMING ACTIVITY

     The November report on location production days from the Entertainment Industry Development Corporation shows a modest rebound in commercial activity.  There were 335 production days during the month versus 155 in October.  Total production activity during November was up 0.4% over 1999.  For 11 months, commercial activity was down 26.5%, while feature film location shoots were off 11.5%.  TV was up over the year by 7.1%, while music was ahead 9.0%.  In the meantime, domestic box office has recovered slightly from its mid-year swoon and is now running ahead of 1999 by 1.2%.  The big story in Hollywood continues to be the potential for a strike in 2001, and how to prepare for it.  (Jack Kyser)
 

AIRLINE PASSENGER TRAFFIC MIXED IN OCTOBER

     Total passenger traffic at LAX in October was up 7.3% over the year.  Things were helped along by an 8.9% gain in international traffic.  Ontario International reported a 2.7% increase.  However, John Wayne Orange County Airport saw volume ease by 0.7% over the year, the third month in a row of declines.  Passenger traffic at Palm Springs in October dropped by 11.8%, the fifth consecutive month of year-to-year declines.
     International air cargo traffic at LAX in October bounced back from September's decline.  Export tonnage was up over the year by a meager 0.4%, but imports were ahead 13.3 percent.  Total international air cargo tonnage at the facility during the month was up 8.1%, moving over the 100,000 tons mark per month for the first time.  (Jack Kyser)
 

TURN OFF THOSE LIGHTS AND SAVE OUR CHRISTMAS

     The California Independent System Operator (ISO) issued its first ever Stage 3 power emergency alert on Thursday evening, when the State's projected operating reserves fell below 1.5%.  There could have been rolling blackouts under a Stage 3 alert, but these drastic measures were averted by reducing power exports to other states and other measures.  The current power shortage is exacerbated by the shutdown of several power plants for maintenance and by cold weather which increases power usage elsewhere, making it unavailable for Californians.  There are a few things you can do to help us get through this power crisis, such as replacing your old fridge (and maybe get a rebate from your electricity provider), turning off your office PCs and lights when you go home, and not running Christmas lights during peak hours (roughly 8am-8pm).  By not running Christmas lights, we can help prevent the energy Grinch from stealing our happy holidays. (George Huang)
Cal ISO: http://www.caiso.com/
 

QUICK STATS:

* BLS: US unemployment rate for 11/00: 4.0% (10/00: 3.9%)
* BLS: US nonfarm employment for 11/00: +94,000 (10/00: +77,000)
* BLS: US nonfarm labor productivity for 3Q00 (revised): +3.3% (2Q00: +5.7%)
* Cal Assn of Realtors: California Housing Affordability Index for 10/00: 30% (9/00: 31%)
* Cal Assn of Realtors: LA County Housing Affordability Index for 10/00: 35% (9/00: 31%)
* Census: US factory orders for 10/00: -3.3% (9/00: +1.1%)
* Census: US factory shipments for 10/00: -0.6% (9/00: -0.2%)
* Census: US unfilled factory orders for 10/00: -0.6% (9/00: +1.1%)
* Census: US factory inventories for 10/00: +0.6% (9/00: +0.3%)
* Census: US wholesale trade inventories for 10/00: +0.0% (9/00: +0.5%)
* Census: US wholesale inventories for 10/00: +0.3% (9/00: +0.0%)
* Fed: US consumer credit for 10/00: +7.0% (9/00: +7.2%)

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