The Economic Data Global Express (e-EDGE)

v.6 n.16       Released April 22, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

INDUSTRIAL PRODUCTION UP, UP, AND UP AGAIN

     At last!!  U.S. industrial production rose by 0.7% in March following increases of 0.4% and 0.5% in February and January.  Positive numbers were a long time in coming.  Last quarter's increase was the first quarterly uptick since the third quarter of 2000.  Better yet, the improvement was widespread.  Almost all industries--the exceptions being aerospace, mining, petroleum products, and printing & publishing--increased output last month.  The apparel, textiles, lumber & wood products, furniture & fixtures, and stone, clay & glass products industries led the March parade, rising by at least 2.0% over the month.  The paper and primary metals industries both registered increases last month as well.  The high tech manufacturing industries--computers & office equipment, communications equipment, and semiconductors & electronic components--collectively boosted production by 1.4%.
     How long can this continue?  The current industrial expansion is being driven by the need to build inventories after the drastic recession-related cutbacks businesses made in 2001.  Thus, improvement will continue until stocks have been rebuilt to normal levels.  Beyond that requirement, economic fundamentals will take over.  Demand for consumer goods and business equipment will need to improve to ensure this expansion has legs.  (Nancy D. Sidhu)
PR: http://www.federalreserve.gov/releases/G17/Current/
 

HOUSING STARTS DROP IN MARCH

     U.S. housing starts declined more than expected in March to 1.65 million units from 1.78 million in February and 1.71 million in January.  At 1.71 million units, the first quarter was still above the 2001 total of 1.60 million housing starts.  Single family starts have shown the most strength so far this year, rising from 1.27 million units in 2001 to 1.35 million in January and 1.47 million units in February before dropping back to 1.30 million last month.  Indeed, single-family housing starts haven't been this high since 1978!  Multiple family starts, which can be volatile from month to month, continued their seesaw pattern, rising by 9% in March to 343,000 units after declining by 14% in February and surging by 27% in January.  Still, the first quarter average--342,000 units--was not much different from the 2001 level of 329,400 units.  Looking at housing by region, the declines were registered in all regions except the Northeast during March, reversing the pattern seen in February.  (Nancy D. Sidhu)
PR: http://www.census.gov/indicator/www/newresconst.pdf
 

ENERGY COSTS DROVE UP CONSUMER PRICE INDEX

     The U.S. Consumer Price Index (CPI) rose by 0.3% in March, following a 0.2% increase in February.  A 3.8% increase in energy costs was the main culprit.  Gasoline prices rose by 8.0% in March but were still 13.1% below the year-ago levels.  Food prices rose by 0.2%.  Excluding food and energy prices, the core CPI rose by 0.1%.  Medical care costs are rising at an alarming rate: 4.4% over a year ago.  Hospital & services were 8.0% more expensive than a year ago.  The overall CPI rose by just 2.4% over the past 12 months.
     Locally, the LA Area CPI rose by 0.6% last month, following a 0.7% increase in February.  The main culprit was, you guessed it, gasoline.  Gas prices rose by 7.8% in January, 10.8% in February, and 14.5% in March.  Prices seem to have stabilized so far in April.  Gas prices were 5.3% below the March 2001 level, however.  Shelter costs were 6.0% above the year-ago level, compared to a national increase of 4.5%.  The local cost of electricity was 38.6% higher than a year ago, but the cost of natural gas service was 43.5% lower.  Medical care was 6.5% higher than a year ago, also higher than the national average of 4.4%.  The overall CPI was 2.8% higher than a year ago.  Overall, commodity prices rose by just 0.3% over a year ago, but the costs of services rose by 4.4%.  The core CPI rose by 0.2% last month and was 3.0% above the year-ago level.
     Up north, the Bay Area saw its shelter costs rise by 5.2% over the past 12 months.   Gas prices rose by 13.2% last month but were 18.9% cheaper than a year ago.
     Looking forward, we don't see much relief at the gas pumps.  Gas prices tend to rise during spring and summer as people drive more.  OPEC is not likely to boost production and Chavez is back in power in Venezuela.  Refineries don't have much spare capacity either: the capacity utilization rate for petroleum products was 93.8% in March.  Gov. Davis has delayed the statewide MTBE ban to 2004, much to the discomfort of ethanol-producing (corn-growing) states (and their members of Congress).  There is currently not enough transportation infrastructure to bring enough ethanol to California.  The energy bill currently being debated in Senate contains provisions to triple the use of ethanol in gasoline and a nationwide phrase out of MTBE.  If California is forced to stick to its 2003 ban, we can probably expect supply shortages (and hence price hikes) late in the year and early next year.  Oh joy!  (George Huang)
US PR: http://www.bls.gov/news.release/cpi.nr0.htm
LA PR:  http://www.bls.gov/ro9/ro9cpila.htm
LA data: http://www.laedc.org/cpi-la.htm
Bay Area PR: http://www.bls.gov/ro9/cpisffe.htm
 

MARCH AIRLINE TRAFFIC  -- SLOW IMPROVEMENT

     The March data from airports around Southern California points to a slow recovery in activity.  At LAX, the year-to-year decline was 14.3% compared with February's drop of 16.5%.  International passenger traffic at LAX was down by 11.5% in March, again better than February's 14.1% slippage.  The trend was the same at Ontario International, with the March passenger count down by 6.9% versus the 7.2% decline in February.  John Wayne Orange County airport's March traffic was down over the year by 1.2%, a tad below February's 1.0% decline.
     On the air cargo front, tonnage at LAX in March was down by 8.9% over the year, but Ontario posted a 6.7% gain.  As to international air cargo tonnage at LAX, exports were down by 12.7% but import tonnage moved back into the plus column with a 4.0% gain.  In February, imports had declined by 12.5% after an 11.2% gain in January.  This fits in with the inventory restocking underway at all levels of manufacturing and distribution.  (Jack Kyser)
LAX data: http://www.lawa.org/statistics/tcom-0302.pdf
ONT data: http://www.lawa.org/ont/statistics/voat-0302.pdf
SNA data: http://www.ocair.com/airportstatistics/airport_statistics_March_2002.htm
 

MIXED CONTAINER COUNTS IN MARCH

     The port of Los Angeles continued its winning ways in March, with the number of loaded import containers up by 5.8% over the year.  In contrast to February (with its 52.2% jump) this was on a strong base.  The loaded export container count was also up in March, by 5.0%.  Total container traffic at POLA in March was ahead by 5.7%.  At Long Beach, the number of loaded import containers fell by 12.1%, but the export container count was up for the second month in a row, with a gain of 4.2%.  The total container count at Long Beach in March was down by 4.6%.  Total container traffic handled at the two ports in March was up by 2.4% to 780,161.  (Jack Kyser)
Data: http://www.portofla.org/detailmonth.asp
 

HOTEL ACTIVITY ALSO IN A RECOVERY MODE IN FEBRUARY

     February data from PKF Consulting points to a slow recovery in Los Angeles County's hotel industry.  The occupancy rate for the month was 67.9%, up from both January and December, 2001.  However, the average daily room rate (ADR) was down over the year by 4.8%.  By area in the County, the best markets were Santa Monica at 81.7% occupancy and Valencia at 80.0%.  An interesting tidbit; the downtown Los Angeles hotel market is recovering, even though it came in with a 53.5% occupancy in February.  However, the area's ADR was ahead by 11.5%, the best performance of any area in the County on this measure.  (Jack Kyser)
 

WORLD BANK GOAL OF REDUCING POVERTY BY HALF

     The International Monetary Fund (IMF) and the World Bank held their annual Spring meeting in Washington, D.C. last weekend (with the attendant "street theater"). On the agenda were urgent issues such as  Argentina's financial crisis, the Japanese recession, and overall weakness in the global economy.  A longer-term ongoing issue that received considerable attention was poverty.  The Bank's official (ambitious?) target is to reduce the number of people living on $1 a day to one-sixth (from nearly one-third in 2000) of the world's population by 2015.
     The World Bank report states that progress being made by China and India (the world's most populous countries) is encouraging and suggests that its global target could be met.  However, in many countries in sub-Saharan Africa, progress towards achieving the poverty-reduction goal was disappointing.  The two key programs being championed by the Bank to reduce poverty levels are channeling funds to education and health.  Opening up markets in industrialized countries for the commodity exports of less-developed nations is also seen as a critical part of the process.  Officials of the World Bank have also placed renewed emphasis on changing the foreign aid mix to poor countries towards grants instead of loans.
     The World Bank's program for dealing with global poverty is receiving favorable review on many fronts.  First, its long-term horizon clearly recognizes the reality that complex cultural values, government policies, and economic models cannot be changed quickly.  Second, by focusing on primary education and infant mortality, the next generation in China, India, Africa, et al can be positively impacted by development strategies.  Third, the underlying goal of poverty reduction provides a common platform for rich and poor countries to coordinate their efforts.  Is it too much to hope for the "us and them" attitude to give way to a less confrontational dialog?  (Ken Ackbarali)
 

QUICK STATS:

* BLS: US Consumer Price Index for 3/02: +0.3% (2/02: +0.2%)
* BLS: LA Area Consumer Price Index for 3/02: +0.6% (2/02: +0.7%)
* Federal Reserve: US industrial production for 3/02: +0.7% (2/02: +0.3%)
* Federal Reserve: US industrial capacity utilization rate for 3/02: 75.4% (2/02: 74.9%)
* Census: US housing starts for 3/02: -7.8% to 1.65 million annual units (2/02: +4.2% to 1.79mil.a.u.)
* Census: US exports for 2/02: +1.2% (1/02: +0.3%)
* Census: US imports for 2/02: +4.0% (1/02: +3.6%)
* Census: US trade deficit for 2/02: US$31.5bil. (1/02: $28.2bil.)
* Conference Board: US Index of Leading Economic Indicators for 3/02: +0.1% (2/02: 0.0%)
* US Treasury: US Federal budget balance for 2/02: -$64.2 billion (1/02: -$76.1bil.)
The following were omitted last week by accident:
* BLS: US Producer Price Index for finished goods for 3/02: +1.0% (2/02: +0.2%)
* BLS: US Producer Price Index for intermediate goods for 3/02: +1.0% (2/02: -0.1%)
* BLS: US Producer Price Index for crude goods for 3/02: +4.0% (2/02: -0.8%)
* BLS: US export prices for 3/02: +0.3% (2/02: -0.2%)
* BLS: US import prices for 3/02: +1.1% (2/02: -0.1%)

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