The Economic Data Global Express (e-EDGE)

v.5 n.42       Released Oct. 15, 2001
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

SEPTEMBER STATE/LOCAL UNEMPLOYMENT RATES MIXED

     California's unemployment rate edged up to 5.4% last month from 5.3% in August and 5.0% in July.  The state's jobless rate was 4.9% in September 2000.  Over the same period, the U.S. unemployment rate increased from 3.9% to 4.9%, narrowing the gap between California and the rest of the nation.  (These figures are all adjusted to eliminate normal seasonal variation.)
     Jobless rates at the county level are not seasonally adjusted.  Unemployment was flat to down in most areas during September.  Los Angeles County's jobless rate fell to 5.8% last month from 6.1% in August.  Similarly, unemployment rates in both Riverside and San Bernardino counties declined by 0.2 percentage points, the former to 5.7% and the latter to 4.6%.  Rates in Orange and Ventura counties were flat at 3.2% and 5.2% respectively.  Compared to September 2000, last month's unemployment rates were higher in Los Angeles County, up by 0.3 percentage points from 5.5%, and Orange County up by 0.6 percentage points from 2.6%.  The other three Southern California counties registered year-to-year declines of 0.4 percentage points in Riverside County, 0.3 percentage points in San Bernardino County, and 0.1 percentage point in Ventura County.  San Diego's unemployment rate was 3.3% in September, down slightly from 3.4% in August and last year.
     Overall, Southern California's unemployment position has weakened moderately over the past 12 months, with the combined 5-county jobless rate rising by 0.2 percentage points to 5.2%.  However, the downtrend in the Bay Area's position has been more severe.  The combined 8-county unemployment rate was 4.6% last month, well above the September 2000 level of 2.4%.  San Jose MSA has deteriorated the most rapidly.  Its jobless rate was 5.9% last month, over three times (!) the September 2000 rate of 1.8%.  San Jose's unemployment rate also was higher than Los Angeles.  The last time that happened was in March 1986.  San Francisco MSA (which consists of Marin, San Francisco, and San Mateo counties) and Alameda/Contra Costa counties also have registered big increases in unemployment, rising by 2.0 and 1.6 percentage points respectively over the past year, to 4.1% and 4.5%.
     Compared to last year, the Central Valley's unemployment picture is flat to improved.  Joblessness in Sacramento MSA was 3.9% last month, the same as in August and September 2000.  Stability also ruled in nearby San Joaquin County, with an unemployment rate of 6.9%.  Other major counties showing improvement were Kern County, down by 1.6 points to 9.7%, and Fresno County, down by 1.1 percentage points to 8.0%.  As usual, Imperial County had the state's highest jobless rate, 25.5%, but also registered the biggest improvement, down by 9.7 percentage points from last year.  Tulare County also registered double-digit unemployment last month, at 12.9% versus 13.0% in September 2000.  (Nancy D. Sidhu)
PR: http://www.edd.ca.gov/nwsrel10.htm
Data: http://www.calmis.cahwnet.gov/file/lfmonth/cal1$pr.txt
 

SEPTEMBER NONFARM JOB NUMBERS DISTURBING

     The September nonfarm jobs report from the California Employment Development Department (EDD) was not good news.  Year-over-year growth eased to 1.1%, or 160,200 jobs.  Job losses in manufacturing continued to pick up speed, dropping by 60,900 over the year.  The durables sector (which includes computers and electronics) was off by 43,400.  However, it is the fall-off in services that really catches the eye.  In January, this sector added 237,500 jobs over the year.  By September, that had eased to 63,200 jobs.   And the EDD noted that the impact of 9/11 was not reflected in the data.
     In Los Angeles County, nonfarm employment growth eased to a paltry 0.6% or 26,500 jobs.  Manufacturing lost 17,200, while services added only 17,200.  Business services managed an increase of just 2,000 jobs, while motion picture/TV production continued to suffer from the "de facto" strike," dropping by 4,700 jobs over the year.  To the south in Orange County, the September jobs report was a touch better, with an increase of 2.3% or 32,800 jobs.  The County's manufacturing sector continued to add jobs, while services also pushed ahead.  The Riverside-San Bernardino area came in with a 2.4% gain, or 23,900 jobs.  Of note here is the flattening out in manufacturing, which has moved sideways since March.
     San Diego County posted a 2.6% gain in September, or 32,400 jobs.  Its manufacturing sector also seems to have topped out, with a modest loss of 500 jobs over the year.  Ventura County came in with a 0.8% increase in September, or 2,200 jobs.  Its manufacturing sector also seems to have peaked, with a loss of 400 jobs.
     In the Bay Area, nonfarm employment growth continued to soften in September.  The San Francisco metro area saw its year-to-year job gain come in at 10,100, or 0.9%.  Meanwhile, the San Jose area continued to see job losses accelerate, with a decline of 24,800 or 2.4%.  (Jack Kyser)
 

CONSUMERS SENDING MIXED SIGNALS

     The University of Michigan's Survey Research Center reported that its index of consumer sentiment rose slightly during the first half of October after a drastic decline in September.  While consumers acknowledged some further deterioration in current economic conditions, their expectations for the future were more optimistic.  Many pundits and the media hailed the report as evidence of a psychological and economic recovery that is under way in the U.S.
     However, there are a number of reasons to be more cautious.  (1) This survey relies upon telephone calls to a relatively small sample of 500 or so.  Thus, the survey results can and do vary from one month to the next even if there has been no change in respondents' attitudes.  The early October results can as easily be interpreted as "probably no change" as "probably an improvement."  (2) After plunging in September/October 1990 (following Iraq's invasion of Kuwait), consumer attitudes stabilized at relatively low levels.  However, consumer spending--indeed the whole economy--continued to decline for several months longer.  (3) Finally, while the military actions abroad may well succeed, there is still considerable uncertainty about further attacks on/in the U.S., which may impact consumers' attitudes negatively in the future.
     It's useful for economy-watchers to monitor consumer attitudes--what consumers think and say--but even better to focus on what consumers are actually doing.  In this respect, the message is decidedly mixed.  It is clear that consumers will respond to the big sales promotions many retailers are having these days.  However, the rest of the retail sector doesn't look strong enough to avert a national recession.  (Nancy D. Sidhu)
Retail Sales PR: http://www.census.gov/svsd/www/retail.html
News including UMich findings: http://biz.yahoo.com/smart/011012/20011012theecon.html
 

FEW INFLATIONARY CONCERNS

     The Producer Price Index for finished goods rose by 0.4% in September, following a similar increase in August.  A 0.9% increase in energy prices led the way, but it was lower than the 1.1% increase in August.  It was mainly due to a 6.3% increase in gasoline prices.  Food prices rose by just 0.2%, down from the 0.9% increase in August.  The 0.3% increase in the core PPI (which excludes food and energy prices) was the largest increase since April.  The PPI for finished goods in September was just 1.6% higher than the year-ago level.  The PPI for intermediate goods rose by 0.1% last month, following a 0.4% decline in August.  It was 0.8% lower than the year-ago level.  The PPI for crude goods dropped 4.1%, following a 2.3% decline in August.  It has fallen for five consecutive months.  It was 14.3% below the year-ago level.  The 9-11 attack will likely subdue any inflationary pressures for now.
     The cost of natural gas delivered to electric utilities dropped by 19.3% last month and was 32.0% below the year-ago level.  This, and the fact that demand has dropped significantly due to the slower economy, has led to a drastic decline in the California spot market prices of electricity.  Natural gas prices at the extraction level dropped by 22.8% last month and were 46.3% below the year-ago level.  Southern California Gas Company has publicly said that this winter's gas bill will be lower than last winter's.
     Interestingly, the survey date for September was Sept. 11, and thus the impact of the 9-11 attack is not covered by this release.  The sudden jump in gasoline prices immediately after the attack won't appear in the PPI at all.  Any non-temporary impacts will be revealed in the October release (survey date: Oct. 9).  (George Huang)
PR: http://www.bls.gov/news.release/ppi.nr0.htm
 

APEC MEETING IN CHINA AND WTO IN A POST 9-11 ENVIRONMENT

     Leaders of 21 nations will gather in Shanghai this week for the annual meeting of the Asia Pacific Economic Cooperation (APEC) organization.  This will be the first foreign venture for President Bush since the September 11th terrorist attack against the United States.  APEC's agenda on fostering globalization by lowering trade and investment barriers is likely to be overshadowed by the war on terrorism.  Japan, Russia, and China are supportive of the U.S. cause, but Indonesia and Malaysia (with large Muslim populations) have expressed opposition to the U.S. military campaign in Afghanistan.
     The September 11th events have changed the setting for the international trade dialog. The world may be more united on the anti-terrorist war, but many countries are alienated by their perception of a "clash of civilizations".  The expectations of progress on economic and trade issues at this week's APEC meeting should not be too high.
     A much larger group of countries, members of the World Trade Organization (WTO), is scheduled to meet in the city of Doha (Qatar) on November 9th.  Security concerns about this location's close proximity to the war zone have escalated in recent weeks, and the meeting may be shifted to Singapore.  Given the unsettled state of  diplomatic and military conditions, approval of China's membership in the WTO may become the main event.  Other agenda items may be sidelined in a scaled down session. (Ken Ackbarali)
 

QUICK STATS:

* BLS: US Producer Price Index for finished goods for 9/01: +0.4% (8/01: +0.4%)
* BLS: US Producer Price Index for intermediate goods for 9/01: +0.1% (8/01: -0.4%)
* BLS: US Producer Price Index for crude goods for 9/01: -4.1% (8/01: -2.3%)
* BLS: US export prices for 9/01: +0.1% (8/01: -0.2%)
* BLS: US import prices for 9/01: +0.3% (8/01: -0.2%)
* Cal Assn of Realtors: California housing affordability index for 8/01: 32% (7/01: 33%)
* Cal Assn of Realtors: LA County housing affordability index for 8/01: 34% (7/01: 35%)
* Cal EDD: California unemployment rate for 9/01: 5.4% (8/01: 5.3%)
* Cal EDD: California nonfarm employment for 9/01: +62,300 (8/01: +8,900)
* Cal EDD: LA County unemployment rate for 9/01: 5.6% (8/01: 5.8%)
* Cal EDD: LA County nonfarm employment for 9/01: +28,200 (8/01: -6,100)
* Census: US retail sales for 9/01: -2.4% (8/01: +0.4%)
* Census: US wholesale trade for 8/01: +0.6% (7/01: +0.7%)
* Census: US wholesale inventories for 8/01: -0.1% (7/01: -0.9%)
* UMich: US consumer sentiment index for 10/01: 83.4 (9/01: 81.1)
* Census: US business sales for 8/01: +0.1% (7/01: +0.4%)
* Census: US business inventories for 8/01: -0.1% (7/01: -0.5%)

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