The Economic Data Global Express (e-EDGE)

v.5 n.16       Released Apr. 16, 2001
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

STATE/LOCAL UNEMPLOYMENT RATES MIXED IN MARCH

     California's headline unemployment rate rose to 4.7% in March from 4.5% in February and 4.6% in January.  Joblessness last month was still below the 5.0% rate of March 2000, and still very low.  (These figures are all adjusted for normal seasonal variation.)
     Jobless rates at the county level are not seasonally adjusted.  The usual seasonal pattern calls for the number of unemployed, and the jobless rate, to fall in March.  Unemployment rates in Southern California's counties all were flat to down last month.  In addition, all were below their levels of March 2000.  Los Angeles County's unemployment rate edged down to 4.7% from 4.8% in February, matching December's 30-year low.  March's rate was down by 0.6 percentage points from March 2000.  Orange County's jobless rate was 2.4% last month, matching February and only 0.1 percentage point below last year's rate.  Likewise, San Bernardino County's jobless rate held constant at 4.5% in March, compared to last year's 4.6%.  Meanwhile, unemployment rates in Riverside and Ventura counties fell by 0.3 percentage points over the month and over the year to 4.5% and 3.6% respectively.  Finally, San Diego's unemployment rate was 2.6% last month, down from 2.7% in February and 2.9% in March 2000.
     Labor markets are still very tight in the Bay Area but some loosening is under way.  The area's combined jobless rate actually rose last month, to 2.6% from 2.5% in February.  San Jose registered the biggest increase, jumping by 0.4 percentage points to 2.2%.  Jobless rates in metropolitan San Francisco and Alameda/Contra Costa counties also rose, but only by 0.1 percentage point, to 2.5% and 2.8% respectively.  In the former's case, March's unemployment rate was the highest since July 2000.
     The unemployment picture in the Central Valley was similar to previous months.  The Sacramento metro area continued to lead the state's inland region with a 3.7% unemployment rate.  And San Joaquin County turned in a rate of 9.4%.  Joblessness was in double digits in most of the rest of central California.  Examples include Fresno MSA at 16.3%, Tulare County at 18.5%, Kern County at 12.9%, and Imperial County with a 16.8% unemployment rate.  (Nancy D. Sidhu)
PR: http://www.calmis.cahwnet.gov/FILE/LFMONTH/CAL1$PR.TXT
PR: http://www.edd.ca.gov/nwsrel04.htm
 

EMPLOYMENT GROWTH IN MARCH

     The March report on nonfarm employment was ostensibly more good news.  California's year-over-year growth was 3.0% or 430,500 new jobs.   And nearly 103,000 new jobs were added between February and March.   However, there were tinges of gray in the data.   The rate of growth in total nonfarm employment has eased over the last few months.  In manufacturing, there is softness in high-tech, and a year-to-year decline in both apparel and textiles production jobs.  The latter two sectors have been hit by spikes in natural gas prices.  Over in the services sector, there was also a slowing in job gains in business services, which includes computer programming activities (think dot.com).
     There was a similar trend around Southern California.  In March, Los Angeles County recorded a 1.8% or 71,700 job gain over the year.  In January, the growth rate was 2.3%.  The County's manufacturing sector continued to post job losses, with March down by 6,700.  Here, it's the same two culprits, aerospace (-6,700 jobs) and apparel and textiles (-2,300 jobs).  There was also an easing in service sector job growth, but the motion picture production numbers remain quite suspect.  There was a loss of 1,900 jobs from February to March and no change over the year (just remember last week's story on the high levels of location production activity over the last 3 months).
     The pace of nonfarm job growth in Orange County has also softened, with a 3.3% or 46,000 job gain over the year.  The County's manufacturing sector is still adding jobs, but growth in retailing and government has backed off.   In the Riverside-San Bernardino area, the March-to-March increase was 4.0%, compared with January's 4.5% rate.  No one sector stood out, just a softening across the board.  San Diego County's March nonfarm job growth was 3.0% or 35,000, again off from the January pace.  Here, there was an easing in services, especially business services.   Ventura County recorded a March gain of 2.8% or 7,600 jobs, with slower growth in most sectors.
     Currently, there seems to be a focus on comparative growth rates between Southern California and the Bay Area.  The March jobs report for the latter's 3 major metro areas again seems OK.  The Oakland area posted a 3.8% or 38,600 increase over the year, while the San Francisco area came in with a 3.9% gain or 41,500 jobs.  However, the San Jose area was a laggard, with a 3.2% or 31,900 job gain over the year.  (Jack Kyser)
 

EUROPEAN CENTRAL BANK FAILS TO DELIVER A RATE CUT

     The European Central Bank (ECB) disappointed financial markets last Wednesday by its decision to keep its key interest rate unchanged at 4.75%.  As was the case when the ECB met two weeks earlier, market expectations were high that a rate cut of ¼% to ½% would be adopted.  With interest rate reductions in the United States, the United Kingdom, and Japan, one has to look more deeply into the operating strategy of the ECB to understand their latest actions.
     First, inflation in the euro-zone is running at a 2.5% rate, above the official 2.0% target, and the still fledgling central bank is anxious to inherit the Bundesbank's envied reputation as a tough inflation fighter.  Second, ECB officials have expressed uncertainty over the extent of the U.S. slowdown and its impact on the EU--presumably a smaller impact than on Canada, Mexico, and Japan.  Third, pressures from the OECD and the six economic institutes in Germany urging monetary ease may have hardened the ECB's resolve to hold steady.  The OECD has downgraded its forecast of GDP growth in the EU this year from 3.1% to 2.7% while the six economic institutes in Germany have also lowered their forecast of Germany's GDP growth from 2.7% to 2.1% in 2001.
     What will it take to change the ECB's position?  (1) In about two weeks, the advance estimate of US. GDP for the first quarter will be released, which is generally expected to  be in the range of zero to a 0.5% increase at an annual rate.  (2) Such a development would cause the ECB officials to worry more about the spillover effects on the eurozone.  Also, an early, inter-meeting interest rate cut by the Federal Reserve (before the May 15th FOMC meeting) would send a powerful signal to the markets as to how the Fed is reading the economic tea leaves.  (3) Evidence of moderating economic activity in France, the stellar performer in the euro-zone, could also push the ECB over the edge.
     If ECB President Wim Duisenberg & Co. are serious about raising their credibility as economic policymakers, as we believe they are, lowering interest rates at their next scheduled meeting, April 25th , would be a good start.  Waiting much longer incurs the risk of an even greater slowdown in Europe and globally.  (Ken Ackbarali)
 

RETAIL SALES DATA

     The State Board of Equalization has just released some interesting retail sales data for the state and local areas.  Second quarter 2000 taxable retail sales numbers continued to look good.  The state posted a hefty 15.9% increase over the year, while Los Angeles County recorded a 12.3% gain.  Orange County enjoyed a 12.5% increase, while Riverside County set the local pace with a 15.2% gain.  San Bernardino County came in with a 14.7% increase over the year, San Diego County posted a 12.2% increase, and Ventura County came in at 12.0%.  Not bad.
     The Board also released a preliminary estimate for total taxable sales in California for the fourth quarter of 2000.  The 6.1% estimated increase over the year is below the third quarter estimate of 10.3%, and well below the gains recorded in the first and second quarters of 2000, 14.6% and 13.2% respectively.  No wonder retailers sang the blues in the fourth quarter.  (Jack Kyser)
2Q00 PR: http://www.boe.ca.gov/news/nr032201.htm
4Q00 PR: http://www.boe.ca.gov/news/nr032301.htm
 

QUICK STATS:

* Cal EDD: California unemployment rate for 3/01: 4.7% (2/01: 4.5%)
* Cal EDD: California nonfarm employment for 3/01: +102,600 (2/01: +94,300)
* Cal EDD: LA County unemployment rate for 3/01: 4.8% (2/01: 4.7%)
* Cal EDD: LA County nonfarm employment for 3/01: +25,400 (2/01: +26,000)
* BLS: US export prices for 3/01: -0.1% (2/01: -0.2%)
* BLS: US import prices for 3/01: -1.6% (2/01: -0.6%)
* BLS: US Producer Price Index for finished goods for 3/01: -0.1% (2/01: +0.1%)
* Census: US retail sales (advance report) for 3/01: -0.2% (2/01: +0.0%)
* Cal Assn of Realtors: California housing affordability index for 2/01: 35% (1/01: 34%)--first increase in 23 months
* Cal Assn of Realtors: LA County housing affordability index for 2/01: 37% (1/01: 38%)
 

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