The Economic Data Global Express (e-EDGE)

v.5 n.32       Released August 6, 2001
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

LABOR MARKET PATTERNS DIDN'T CHANGE MUCH IN JULY

     The U. S. unemployment rate was 4.5% in July according to the latest information released by the Bureau of Labor Statistics.  Last month's rate was the same as in June but higher than the 4.0% registered in July 2000.  July marked the 4th consecutive month that joblessness remained at or near 4.5%.   About 6.4 million workers were unemployed last month, some 750,000 more than last year.  Over half, or 51%, of them had been laid off, temporarily or permanently, from their last jobs, while 12.1% had deliberately left their previous positions, presumably to find and take new ones.  What a difference a year can make.  A year ago in better economic times, "job losers" made up less than 44% of the unemployed while "job leavers" accounted for 14%
     The BLS employer survey for July wasn't especially promising either, though the deterioration was less than in June.  Total nonfarm employment fell by 42,000 jobs during July, after declining by 91,000 jobs in June and rising by 41,000 jobs in May.  Excluding government hiring, private sector payrolls dropped by 73,000 jobs in July and have fallen by 394,000 positions, or 0.4%, since March.
     July's industry winners and losers were much the same as in previous months.  Manufacturing continued to be the biggest source of weakness in the employer survey, as payrolls fell by 49,000 jobs in July, their twelfth consecutive down month.  Job counts in manufacturing plants have dropped by 399,000, or 2.2%, since March.  Job counts actually increased in the motor vehicles industry last month, though July was still 70,000 jobs, or 6.9%, below the year-ago employment level.  However, employment in several high technology equipment industries has been dropping rapidly the last few months.  Altogether, manufacturers of computers, office equipment, semiconductors, and other electronic components have discharged 7.7% of their employees, or 83,000 workers, since March.  Not a good sign for tech-heavy California.
     The nation's service sector continued to grow in July, but the rate of growth has slowed markedly in recent months.  The main factor in the overall service-industry slowdown has been shrinking demand for temporary workers, many of whom worked in manufacturing plants.  Employment at help supply houses fell by 42,000 positions between June and July and was down by 175,000 jobs, or 5.3%, from March.  The health services industries have been a partial offset, rising by 27,000 jobs month-to-month and by 95,000 positions since March.    (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/empsit.nr0.htm
 

UK INTEREST RATES CUT AS FEARS OF ECONOMIC SLUMP MOUNTS

     The Bank of England cut its key interest rate last Thursday from 5.25% to 5.00%--the fourth such move since the beginning of this year when the rate stood at 6.00%.  This latest action took financial markets by surprise and underscores the concerns of British monetary officials about weakening of the global economy.  Economic growth in the UK, measured by GDP, increased by an annual rate of only 2.1% in the second quarter, following the first quarter's 2.7% rate.
     Parallels with the experience of the U.S. economy are quite uncanny.  First, like their American counterparts, British consumers are continuing to spend and their confidence remains high.  Second, housing markets are strong, sparked by low mortgage interest rates as well as rising home prices.  Third, manufacturing is in a "recession-like" slump.  Fifth, the trade deficit is widening as exports sag.
     Key differences between the American and British scenes are (1) business investment in the UK has not collapsed to the same extent as in the U.S.; (2) no tax cut in the UK; and (3) the Federal Reserve does not have an explicit, official inflation target, whereas the Bank of England does.  It is set at 2.5% and inflation is currently just under this at 2.4%--leaving virtually no room for more easing, theoretically.
     Outlook:  The British action is likely to exert more pressure on the European Central Bank (ECB) to lower its key interest rate from its current 4.5%--in the face of evidence of weakening growth trends in the EU.  In the weeks ahead, we expect to see another reduction in British interest rates, which will clearly demonstrate flexibility in their monetary policy instead of becoming paralyzed by its inflation target as the ECB appears to be. (Ken Ackbarali)
 

HOMEBUILDING EASES IN JUNE

     The June report from the Construction Industry Research Board points to an easing in new homebuilding activity.  The number of permits issued in the state during the month was down from year ago levels, and for 6 months the unit total is ahead of last year by a thin 0.7%.  Around Southern California, only the Riverside-San Bernardino area managed an increase in permits over the year in June.  However, for the first 6 months that metro area is up by 24.7% to a State leading 13,444 units.
     In Los Angeles County, the June count was below last year, but the 6-month permit total was still ahead of last year by 17.5%.  At 10,133 units, LA ranks second in the State.  Orange County's homebuilding industry continued to lag, with June permits down over the year, and the 6-month total off by 42.0%.  It was the same pattern in San Diego County, only the 6-month total was down by a more moderate 10.3%.  And it was also déjà vu time in Ventura County, with its 6-month total below last year by 9.3%.
     The Bay Area's homebuilding market was quite weak.  The San Francisco metro area's 6-month permit total was down 39.7%, while San Jose lagged behind by 18.0% and Oakland was down by 7.6%.  However, things were more upbeat in the Sacramento metro area, with June's permit total up over the year, and the 6-month total ahead by 16.5%.  (Jack Kyser)
 

NONRESIDENTIAL CONSTRUCTION MIXED IN JUNE

     The June report from the Construction Industry Research Board revealed more minuses than pluses in nonresidential construction activity at mid-year 2001.  In Los Angeles County, industrial and retail permit valuations continued to lag last year, by 43.5% and 2.1% respectively.  Office permit values were still ahead, by 177.1%, but this lead is narrowing.  In Orange County, new industrial activity was up by 213.2%, but office and retail were behind, by 54.6% and 16.0% respectively.
     In the Riverside-San Bernardino area, things are a tad extreme.  Office permit valuations for 6-months were up 91.2%, but on a small base.   However,  industrial permits were 40.2% below last year's total, while retail permits were down by 33.5%.  San Diego County saw declines across the board, with industrial down 56.6%, office off by 19.8% and retail down by 34.7%.  On the other hand, in Ventura County every thing was up, with industrial ahead by 17.3%, office up 132.7%, and retail up by 75.8%.
     In the 9-county Bay Area, things remained interesting in June.  Industrial permit values were down by 4.7% (but San Jose was up 6.2%), while office permit values were up by 67.8%, with San Jose again the leader of the pack.  (Given recent job losses in San Jose, let's hope there is a long construction period.)   Bay Area retail permits were up by 41.1%, again with strength in San Jose.  (Jack Kyser)
 

THIRD QUARTER 2000 RETAIL SALES STRONG

     It's nice to write about economic strength, even if it is somewhat old news.  The State Board of Equalization has just reported 3rd quarter 2000 taxable retail sales, and results were strong.  California posted a 12.0% increase over the year, but this was weaker than 1st and 2nd quarter gains.  This pattern was repeated around Southern California, with Los Angeles County posting an 11.0% sales increase in the 3rd quarter, and Orange County a 10.3% gain.  Riverside County came in with a 12.9% increase, while San Bernardino County was close behind with a 12.5% reading.  San Diego County's 3rd quarter 2000 retail sales increase was 12.4%, while Ventura County had a 10.5% gain.  (Jack Kyser)
 

LOCATION PRODUCTION ACTIVITY DOWN IN JULY

    

According to the Entertainment Industry Development Corporation, off-lot production activity in Los Angeles in July was 13.4% below year-ago levels.   This is the first time this year that this comparison has gone negative, and is evidence of the "de facto" strike impact.   Feature film production was down 32.5%, TV was off by 19.3%, while "music" was down 23.1%.  Commercial production was up in July by 84.2%, but last year was commercial strike time.   How long will the de facto strike last?  Probably until the 4th quarter.  However, Hollywood is doing well at the box office, with year-to-date receipts running 7.0% ahead of last year.
     An interesting sidebar to the de facto strike and other movie production stuff.  At year-end, the Canadian actors' union contract with producers expires, with January 16, 2002 being the drop dead date.  While people don't expect a strike, it adds drama to the lives of run-away producers.  And did you hear about the upcoming  series "Pasadena" where most of the production work will be done in Vancouver. (Jack Kyser)
Data: http://www.eidc.com/Coverage/Production_Data/Shooting_Days/shooting_days.html

 

QUICK STATS:

* BEA: US personal income for 6/01: +0.3% (5/01: +0.2%)
* BEA: US personal consumption expenditures for 6/01: +0.4% (5/01: +0.3%)
* BEA: US personal savings rate for 6/01: 1.1% (5/01: 1.2%)
* BLS: US unemployment rate for 7/01: 4.5% (6/01: 4.5%)
* BLS: US nonfarm employment for 7/01: -42,000 (6/01: -93,000)
* BTM: US vehicle sales for 7/01: -4.7% to 16.3 million annual units (6/01: +2.4% to 17.1mil.a.u.)
* Conference Board: US Consumer Confidence Index for 7/01: 116.5% (6/01: 118.9%)
* Census: US construction spending for 6/01: -0.7% (5/01: -0.2%)
* Census: US new factory orders for 6/01: -2.4% (5/01: +2.2%)
* Census: US factory shipments for 6/01: -2.8% (5/01: +2.4%)
* Census: US factory inventories for 6/01: -0.7% (5/01: -0.6%)
* Census: US unfilled factory orders for 6/01: -0.5% (5/01: -0.8%)
* Natl Assn of Purchasing Mgmt: US Purchasing Managers' Index for 7/01: 43.6% (6/01: 44.7%)
* USDA: US agricultural prices for 7/01: -0.9% (6/01: -0.9%)--The Congress passed a $5.5 billion farm relief bill and President Bush indicated that he would sign it into law

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