The Economic Data Global Express (e-EDGE)

v.5 n.20       Released May 14, 2001
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

STATE/LOCAL UNEMPLOYMENT RATES ROSE IN APRIL

     California's headline unemployment rate edged up to 4.8% in April from 4.7% in March and 4.5% in February.  California has narrowed the gap between the state's unemployment rate and the U.S. over the past year.  Joblessness last month was still below the 5.0% rate of April 2000, while national unemployment rate has risen from 4.0% in April 2000 to 4.5% last month.  (These figures are all adjusted for normal seasonal variation.)
     Jobless rates at the county level are not seasonally adjusted.  Except for increased hiring in agriculture-based regions, however, April seasonal employment and unemployment patterns show little change from March.  Unemployment rates in Southern California's counties were decidedly mixed last month but showed little change overall except for Ventura County.  All counties were still below their levels of April 2000 except for Orange County.  Here are the details:  Los Angeles County's unemployment rate edged up to 4.8% from 4.7% in March.  April's rate was down by 0.4 percentage points from April 2000.  Orange County's jobless rate was 2.5% last month, 0.1 percentage point above March and last year's rate.  Riverside County's 4.5% unemployment rate matched its March level and was 0.3 percentage points above April 2000.  San Bernardino County's jobless rate, at 4.4%, was just below the 4.5% registered in both March and last April.  Ventura County's unemployment rate fell to a record low of 3.3%, down by 0.3 percentage points over the month and over the year.  Finally, San Diego's unemployment rate was 2.7% last month, up from 2.6% in February but down from 2.8% in April 2000.
     Labor markets in the Bay Area have loosened noticeably in recent months.  However, the region's unemployment rates still are well below the rest of the state.  The area's combined jobless rate rose to 2.8% last month from 2.6% in March and 2.4% one year ago.  Tech-heavy San Jose registered the biggest increase, jumping by 0.4 percentage points (to 2.6%) for the second consecutive month.  Jobless rates in metropolitan San Francisco and Alameda/Contra Costa counties rose by 0.2 percentage points, to 2.7% and 3.0% respectively.  In the former's case, March's unemployment rate was the highest since July 1999.
     The Sacramento metro area continued to lead in the Central Valley with a 3.6% unemployment rate, down from 3.8% in March.  And San Joaquin County turned in a rate of 8.6%.  Otherwise, double-digit joblessness was the rule in much of central California.  Typical examples include Fresno MSA at 14.3%, Tulare County at 15.3%, Kern County at 10.8%, and Imperial County with a truly depressing 19.8% unemployment rate.  (Nancy D. Sidhu)
PR: http://www.edd.ca.gov/nwsrel05.htm
Data: http://www.calmis.cahwnet.gov/file/lfmonth/cal1$pr.txt
 

SLOWER GROWTH IN EMPLOYMENT IN APRIL

     The April report on nonfarm employment generally pointed to a slowing economy.  The state posted a 2.9% or 422,900 job gain over the year, compared with the string of 500,000 plus job increases recorded from May, 2000 through January, 2001.  There continues to be a sharp slowdown in manufacturing, reflecting slower growth in aerospace, electronics and the apparel/textiles sector.
     Slower growth was also the order of the day in Los Angeles County in April.   Nonfarm employment was up by 1.8%, or 72,900 jobs over the year.  Job losses in manufacturing picked up, again reflecting weakness in aerospace and apparel/textiles.  The motion picture production job numbers still don't make sense, with April's count of 134,600 down over both the month and year.  However, according to the EIDC's location production day report, activity ran at high levels from December through April, and we haven't heard of any stunning breakthroughs in productivity in the industry.
     The Riverside-San Bernardino area also posted slower employment growth in April, with a gain of 3.8% or 37,600 jobs.  The manufacturing sector has seen an easing in the pace of growth, and job gains in retailing have also weakened.  Ventura County's nonfarm employment was up by 2.2% or 6,100 jobs, again a slowdown.  The weakness here was in services.
     However, two local areas bucked the trend.  Orange County saw growth pick up from March to April, to a 3.6% or 49,400 job year/year increase.  The strength was in manufacturing and finance/insurance/real estate.  San Diego County also saw a pick-up, with a 3.5% or 41,300 job gain over the year.  The strength here came in the services sector.
     In the Bay Area, the 3-county San Francisco area posted a 3.5% or 37,400 gain over the year.  The San Jose area posted a 2.9% or 28,800 increase.  (Jack Kyser)
 

FEDERAL RESERVE WORRIES ABOUT WEAK ECONOMY NOT YET OVER

     The Federal Open Market Committee (FOMC) is scheduled to meet tomorrow to consider whether another reduction in interest rates is needed.  So far this year, the FOMC has adopted four cuts, bringing the Fed Funds Rate (FFR) down to 4.50% and there seems to be no hesitancy to make inter-meeting moves.  What does the statistical evidence say about the economy's condition and thus the urgency to lower the FFR?
     Factors that will influence the FOMC to ease another notch are:
(1)  Labor market conditions are deteriorating rather quickly, witness the uptick in the national unemployment rate to 4.5% in April and the recent rise in jobless claims.
(2)  Corporate profits have been hammered in the first quarter, seriously affecting investment spending, especially for technology products.
(3)  Steep increases in prices of electricity, natural gas, and gasoline are having the effect of a tax on consumers and businesses.
(4)  The strong dollar, the prolonged slump in Japan, and weaker economies in Asia and Latin America are now dampening U.S. exports.
(5)  The European Central Bank's decision last week to cut its key interest rate from 4.75% to 4.50, the first cut in 2 years, underscores their concerns about the impact of U.S. slowdown on EU growth, already showing up in Germany.
     One might ask how much room the Fed has to lower the FFR beyond the current 4.50% level. We have to go back to 1992-93 to identify the recent low point, 3.00%, when the inflation rate (based on the Consumer Price Index) was 2.7%.  Coincidentally, the current inflation rate is about the same as it was 8 years ago; so the Fed can reduce the FFR by 100 basis points or more before setting off alarm bells.
     An interest rate cut of 50 basis points seems to be in the cards at tomorrow's FOMC meeting.  This will help to ease the interest burden in the household sector and also lower the cost of business financing.  With additional easing by the Federal Reserve over the next several weeks, the contention that it waited too long to ease last winter will begin to pale in the face of a consistent and aggressive strategy to head off a recession.  It may be premature to applaud the Fed at this time, but we getting ready to do just this.  (Ken Ackbarali)
 

POPULATION GROWTH HEALTHY FROM 2000 TO 2001

     The California Department of Finance has just released its January 1, 2001 population estimates for counties and cities in the state.   The state's population increased by 611,000, compared with January 1, 2000.  This was considerably higher than the 1999-2000 gain of 547,000.  Finance noted a pickup in net migration to the state, of 310,000 between 2000-2001.
     In ranking counties based on numerical change, the south ruled.  Los Angeles was first, with an increase of 159,700 pushing the January 2001 count to (9,802,800.   Orange County placed 2nd with an increase of 58,000 and a total of 2,925,700.  Riverside County was 3rd with an increase of 51,600, and a total of 1,609,400.  San Diego County was 4th, up by 48,200 to a total of 2,883,600.  In 5th position was San Bernardino County, with an increase of 37,500 to a total of 1,764,300.
     Among the state's cities, Los Angeles added 56,400 residents from 2000 to 2001, pushing its total to 3,802,700.  The Department of Finance has adjusted its data for the undercount in the 2000 Census of Population.  (Jack Kyser)
PR: http://www.dof.ca.gov/html/Demograp/e-1press.doc
 

AUTO BUSINESS IN L.A.

     A study by University of Michigan for the Alliance of Automobile Manufacturers shows that California ranked third in the auto industry's economic impact, behind only Michigan and Ohio.  LAEDC's report on the auto industry in Southern California, released a few months ago, digs into the available local data and explores this "hidden" industry (hint: you don't have to make any cars to be big in the auto industry...).  You can still order this report for just $10.  Please call 213-236-4822 and ask for the motor vehicle industry issue of the Economic Edge.
UMich study site: http://www.autoalliance.org/umstudy/
 

QUICK STATS:

* BLS: US labor productivity for 1Q01: -0.1% (4Q00: +2.0%)
* BLS: US unit labor cost for 1Q01: +5.2% (4Q00: +4.5%)
* BLS: US export prices for 4/01: +0.0% (3/01: -0.1%)
* BLS: US import prices for 4/01: -0.5% (3/01: -1.5%)
* BLS: US Producer Price Index for finished goods for 4/01: +0.3% (3/01: -0.1%)
* BLS: US Producer Price Index for intermediate goods for 4/01: -0.2% (3/01: -0.2%)
* BLS: US Producer Price Index for crude goods for 4/01: +0.9% (3/01: -1.7%)
* Cal EDD: California unemployment rate for 4/01: 4.8% (3/01: 4.7%)
* Cal EDD: California employment for 4/01: +33,300 (3/01: +103,700)
* Cal EDD: LA County unemployment rate for 4/01: 5.1% (3/01: 4.8%)
* Cal EDD: LA County employment for 4/01: +6,000 (3/01: +28,100)
* Census: US wholesale trade for 3/01: -1.3% (2/01: -0.6%)
* Census: US wholesale inventories for 3/01: +0.1% (2/01: -0.2%)
* Census: US retail sales for 4/01: +0.8% (3/01: -0.4%)
* Census: US business sales for 3/01: -0.3% (2/01: -0.4%)
* Census: US business inventories for 3/01: -0.3% (2/01: -0.4%)
* Fed: US industrial production for 4/01: -0.3% (3/01: -0.1%)
* Fed: US industrial capacity utilization rate for 4/01: 78.5% (3/01: 78.9%)

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