The Economic Data Global Express (e-EDGE)

v.6 n.23       Released June 10, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

U.S. LABOR MARKETS A LITTLE BETTER IN MAY

     The Bureau of Labor Statistics released its monthly labor market report Friday showing that labor market conditions improved slightly in May compared to April.  The headline figure was the drop in the nation's unemployment rate to 5.8% from 6.0% in April and 5.7% in March.  Jobless rates fell for all categories of workers except teenagers.  The biggest declines were registered by blacks (with unemployment down by a full percentage point to 10.2%), Hispanics  (down by 0.9 percentage points to 7.0%), and workers without a high school diploma (down by 0.5 percentage points to 8.5%).  Last month's decline was unexpected but suggests little change in joblessness last month compared to the March-April period.
     The Bureau's survey of employers also was somewhat encouraging.  Nonfarm employment increased by 41,000 jobs in May, following a revised increase of 6,000 jobs in April and a revised decline of 5,000 jobs in March.  Though employment is still at a low level, April and May mark the first two-month period of consecutive upticks since February-March 2001, just prior to the start of last year's recession.  Also, nonfarm employment was essentially unchanged over the last three months, a distinct improvement over previous months.  Some 1.75 million jobs disappeared between March 2001 and February 2002.
     The industry employment picture for May was similar to April and March, showing job losses in construction and manufacturing.  (The latter posted its 22nd consecutive month of deterioration.  However, the last two monthly declines were considerably smaller than the large drops of last year.)  Losses in the goods-producing industries during May were more than offset by an increase of 64,000 jobs in service producing industries.  Industries registering notable increases were:  help supply services, up by 25,000 positions, engineering and management services, which rose by 23,000 jobs, and health services, up by 13,000 jobs.  However, employment at the nation's hotels and other lodging places declined for the second month in a row and was 5.6% below the May 2001 level.
     Data Note:  Every year the Bureau of Labor Statistics revises the nation's recent employment history when it releases figures for May.  Most of these revisions are important only to statisticians.  However, the Bureau also "re-benchmarked" its previously published figures to incorporate actual employment counts as of March 2001.  These turned out to be lower than the Bureau had been assuming.  In addition, the Bureau reduced its estimates of net new business formations (i.e., startups minus shutdowns) during the recession (since March 2001).  The net result of all these (re-) calculations was a significant downward adjustment of 523,000 jobs--or 0.4 percent--to the Bureau's estimate of total U.S. nonfarm employment in April 2002.  Note also that, substantial as they were, these revisions still do not tell the complete story of the recession's impact on employment.  We won't know that until next year, when the Bureau makes benchmark revisions based on actual March 2002 job counts.  (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/empsit.nr0.htm
 

FOREIGN DIRECT INVESTMENT IN U.S. FELL SHARPLY IN 2001

     Foreign Direct Investment (FDI) in the United States fell 60% in 2001 to $132.9 billion from $335.6 billion in 2000.  This sharp decline was a reflection of weakness in U.S. and global economic activity as well as a drop-off in mergers and acquisitions.  Last year's decline should be viewed in the context of three consecutive years, 1998-2000, of  unprecedented volumes of FDI.  Last year's FDI amount was still impressive, more than double the amount in 1995, 66.3% more than in 1996, and nearly double the 1997 amount.
     The largest foreign investors in 2001 were Canadian ($16.9 bn.), British ($16.6 bn.), Swiss ($15.0 bn.), Dutch ($13.2 bn.), and German ($12.8 bn.).  Japanese outlays in the U.S. plummeted to $3.8 billion in 2001, from $26.0 billion in the prior year.
     Not surprisingly, the biggest declines in FDI last year were centered in the IT/telecommunications industry, where foreign investors spent $25.9 billion to acquire or establish businesses in the U.S., compared with a whopping $67.9 billion a year earlier.  A sharp drop-off also occurred in the computer/electronics industry, from $42.6 billion in 2000 to $10.2 billion in 2001.
     Inbound FDI in the U.S., according to the U.S. Department of Commerce, supported 341,000 (direct) jobs in 2001 and 770,000 (direct) jobs in 2000. This inflow of investment capital represents a powerful vote of confidence in the long-term stability and attractiveness of the U.S. economy.  Despite the plunging stock market, the recession, terrorist attacks, Enronitis, et al, foreign investors continue to place the U.S. near the top of their list of investment destinations. (Ken Ackbarali)
PR: http://www.bea.doc.gov/bea/newsrel/fdinewsrelease.htm
 

MAY LOCATION PRODUCTION DAYS STILL LAGGING

     According to the Entertainment Industry Development Corporation (EIDC), off-lot film production activity in May continued to lag behind last year.  The month's total of 2,236 location days was 10.0% below the 2001 count of 2,485 (when the film production frenzy was starting to wind down).  The May 2002 number was also below the April count of 2,622 days.
     TV production was up over the year by 37.1%, while commercial activity increased by 7.5%.  Music (generally a small number) was below last year by 27.6%.  The retarding factor continued to be "features," which was down by 36.0%.  However, the May total of 824 days was the highest since June 2001 when there were 1,005 feature location production days.  And the number of feature films in "prep" is running at high levels, which means better times in the second half of the year.
     As far as domestic box office goes, this is as good as it gets.  Year-to-date, the box office is ahead by 21.2%, while admissions are up by 17.0%.  (Wow!)  (Jack Kyser)
 

AND APRIL TRAFFIC AT BURBANK AIRPORT

     . . . or the Burbank-Glendale-Pasadena Airport.   The passenger count for April was 4.0% below last year, which represents a continuing recovery trend.  March was off by 4.2%, February was down by 6.8%, while January was behind by 5.7%.  (Jack Kyser)
 

HOUSING AFFORDABILITY DOWN IN APRIL

     The Housing Affordability Index (HAI) calculated by the California Association of Realtors shows increasing difficulty for current renters to acquire their own homes.  The HAI indicates the percentage of all households able to afford a median-priced home.  California's HAI (for single-family homes) dropped from 29% in March to 27% in April.  It was 34% a year ago.  For condos, the HAI was 41% in April, barely changed from 42% in March but considerably lower than the 47% mark scored a year ago.  In Southern California, Orange County was the most unaffordable with an HAI of 23% (April), down from 25% in March and 28% a year ago.  LA County's HAI was 31% in April, down from 33% in March and 38% a year ago.  Ventura County followed with 32% in April, down from 36% in March and 37% a year ago.  Riverside County is catching on quickly.  Its HAI was 36% in April, down from 39% in March and 42% a year ago.  San Bernardino County remained the most affordable at 53%, unchanged from March and just slightly lower than a year ago (54%).  (George Huang)
PR: not available online at the time of this writing, please check http://www.car.org/index.php?id=OTE0 on Tuesday
 

QUICK STATS:

* Bank of Tokyo-Mitsubishi/Schroders: US chain store sales for 5/02: +3.4% over a year ago (4/02: +1.6% o.y.a.)
* BLS: US unemployment rate for 5/02: 5.8% (4/02: 6.0%)
* BLS: US nonfarm employment for 5/02: +41,000 (4/02: +6,000)
* Cal. Assn. of Realtors: Housing Affordability Index for 4/02: 27% (3/02: 29%)
* Cal. Assn. of Realtors: Housing Affordability Index for Los Angeles County for 4/02: 31% (3/02: 33%)
* Census: US wholesale trade for 4/02: +1.6% (3/02: +0.1%)
* Census: US wholesale inventories for 4/02: -0.7% (3/02: -0.3%)
* Federal Reserve: US consumer credit for 4/02: +6.3% seasonally-adjusted annual rate (3/02: +4.8% s.a.a.r.)

The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to research@laedc.org. To contact LAEDC, please call 213-622-4300.

Subscribe to e-EDGE and receive current economic news and major developments.  Your e-mail address will not be disclosed to any outside party (including e-EDGE sponsors) under any circumstances.

To send us comments regarding e-EDGE, please e-mail to research@laedc.org.