The Economic Data Global Express (e-EDGE)

v.6 n.28       Released July 15, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

STATE/LOCAL UNEMPLOYMENT RATES MOSTLY HIGHER IN JUNE

     California's unemployment rate was 6.4% last month, the same as in May and slightly lower than April's 6.5% reading.   The state's jobless rate was 5.2% in June 2001.  Meanwhile, the U.S. unemployment rate increased by 1.3 percentage points over the past 12 months, from 4.6% to 5.9%.  (These figures are all adjusted to eliminate normal seasonal variation.)
     Jobless rates at the county level are not seasonally adjusted.  Typically, employment falls and unemployment rates rise in June.  All of the Southern California county unemployment rates followed this pattern last month.  Los Angeles County's jobless rate was 7.1%, up from 6.6% in May.  Riverside, San Bernardino, and Ventura counties' rates also rose by 0.5 percentage points, the first two to 5.7% and the latter to 4.8%.  Meanwhile, Orange County's unemployment rate rose from 3.7% in May to 4.0% last month.  Compared to June 2001, last month's jobless rates were noticeably higher in Los Angeles and Orange counties, up by 1.5 and 0.9 percentage points respectively.  Riverside and Ventura counties registered smaller year-to-year increases of 0.7 percentage points, while joblessness in San Bernardino County increased by only 0.5 percentage points.  San Diego's unemployment rate was 4.1% in June, up by 0.3 percentage points from May and 0.7 percentage points higher than last year.
     The Southern California (5-county) jobless rate has increased significantly over the past 12 months, rising by 1.1 percentage points to 6.1% last month.  In the Bay Area, the combined 9-county unemployment rate was also 6.1% in June, but this was 2.0 percentage points above the June 2001 level of 4.1%.  San Jose has experienced the worst of the area's problems.  Last month's jobless rate was 7.6%, much higher than the June 2001 rate of 4.4%.  Alameda County also registered a big increase over the year of 1.8 percentage points to 6.5%.  Unemployment rates in three other Bay Area counties rose by 1.5 or 1.6 percentage points over the past year to 6.9% (San Francisco), 5.0% (Contra Costa), and 4.5% (San Mateo) respectively.
     Unemployment continued high in most of the Central Valley. Compared to last year, however, the Central Valley's unemployment record was mixed.  The jobless rate in Sacramento County was 5.2% last month, up from 4.2% in June 2001.  Nearby, San Joaquin County's unemployment rate increased by 1.2 percentage points, to 9.3%.  Joblessness in Fresno, Tulare, and Kern counties continued high, at 13.3%, 14.0%, and 11.2% respectively.  However, Kern County's rate rose by only 0.7 percentage points over the year while unemployment declined in Fresno (down by 0.1 percentage point) and Tulare County (down by 0.4 percentage points).  Finally, Imperial County's jobless rate has dropped by 3.0 percentage points over the past 12 months, but it remained highest in the state in June, at 17.4%.   (Nancy D. Sidhu)
PR: http://www.edd.ca.gov/nwsrel07.htm
Data: http://www.calmis.cahwnet.gov/file/lfmonth/cal1$pr.txt
 

JUNE JOBS REPORT DULL

     The June jobs data from the California Employment Development Department (EDD) pointed to an economy that is still trying to recover.  For the state, total nonfarm employment in the month was down by 52,500 jobs over the year.  Manufacturing was down by 88,100 jobs, with aerospace/high-tech dropping by 41,800 jobs.  However, the job losses in this sector do seem to be moderating.  Services declined by 14,400 jobs over the year, and again losses were easing.  Of note is a month-to-month increase in (temporary) personnel supply, while motion picture production posted its smallest year-to-year job loss in 9 months, a decline of 9,900.
     Around Southern California, the June employment trend was similar.  Los Angeles County was down by 27,500 jobs over the year, though there was some moderation of the losses.  The County's manufacturing sector has lost 18,800 jobs over the year, with aerospace off by 7,100, and apparel down by 2,000.  The service sector declined by 10,100 jobs, the narrowest so far this year.  Like the state, the County's job loss in motion picture production in June of 8,600 was the smallest in 8 months.  The year-to-year job loss in this industry for the first 5 months averaged 19,300.  Nonfarm employment in Orange County continued to lose momentum in June, with a gain over the year of just 5,100 jobs, the smallest so far this year.  Manufacturing declined by 5,900 jobs, while construction employment was flat.  Service employment in Orange County managed a gain over the year of just 1,900 jobs.  While business services and hotels both posted increases, the amusement sector dropped by 2,100 jobs.
     While the Riverside-San Bernardino area continued to set the regional growth pace, it too saw an easing in the pace of growth in June with a gain over the year of 30,700 jobs, the smallest so far this year.  However, there was a bit of good news in its manufacturing sector, which has been adding jobs since January.  However, the June count was down from last year by just 200 jobs.  The largest job gains over the year in the area were posted by government (+13,200) and services (+8,600).  San Diego County also saw a moderation in nonfarm employment growth over the year, with a June increase of 21,200 jobs, the smallest since December.  Its manufacturing sector seems to be stabilizing, but was down by 1,600 jobs over the year.  The biggest job gains in the County during June came in services (+10,900) and retail trade (+7,100).  Ventura County continued on the knife edge in June, with an increase over the year of 500 jobs, after May's gain of just 100.  Some good news was found in manufacturing which now has posted 3 months in a row of year-to-year increases.
     While the June jobs report for the Bay Area was still rather unpleasant, the magnitude of the year-to-year losses is narrowing.  The Oakland area lost 3,600 jobs over the year.  The San Francisco area saw a decline of 30,000, the smallest loss to date in 2002.  The San Jose area lost 45,700 jobs over the year in June, again a big improvement from the first quarter, when the year-to-year job loss averaged 83,300.  (Jack Kyser)
Cal data: http://www.calmis.cahwnet.gov/file/lfmonth/cal$pr.txt
LA County data: http://www.calmis.cahwnet.gov/file/lfmonth/la$pr.txt
 

CANADA'S FARSIGHTED IMMIGRATION POLICY MAKES GOOD SENSE

     Canadian government officials are expressing their concerns about the slow growth of the country's population and labor force, as well as the aging of its baby-boomers (born between 1946 and 1964) approaching retirement.  Canada's population increased by 6.3 million people or by 25.6% in the 20-year period, 1980 to 2000 and currently stands at 31.4 million.  Best projections to 2020 show a fairly low annual growth rate of 0.6%.  Canada's response to this impending problem is to aggressively attract immigrants to fill critical jobs where shortages of qualified workers have been identified.
     For example, Canada recently celebrated its success in attracting 250,386 immigrants in  2001, 25,000 above its target and in spite of the complications raised by the September terrorist attack on the United States.  While the United States, Western Europe, and Japan place fairly stringent limits on immigration, Canada is on an altogether different path as it attempts to come to grips with the economic implications of labor shortages in the future.
     "Economic" immigrants comprised 60% of total "permanent residents" in Canada in 2001--made up of people with university education, trade certificates of apprenticeship, and wealthy investors and entrepreneurs.  11% of last year's immigrants were refugees and 27% were people joining family members already in the country and themselves immigrants.  The major countries of origin of last year's immigrants were China, India, Pakistan, and the Philippines.  Not surprisingly, the three big cities of Toronto, Vancouver, and Montreal were the major destinations of newcomers to Canada.
     Immigration of the scale occurring in Canada is not without problems.  For example, foreign-trained doctors, engineers, and nurses find that their qualifications are not recognized and they must enroll in Canadian schools in order to be "re-credentialed."  It is a fairly common situation to encounter the world's most highly-trained and educated taxi drivers on the streets of Toronto.  On balance, Canadian officials deserve kudos for taking the longer view and having the foresight to implement policies that should enhance Canada's future economic growth.  (Ken Ackbarali)
 

WHOLESALE PRICES POSTED AN INCREASE, FINALLY...

     The Producer Price Index (PPI) for finished goods, also known as the wholesale price index, rose by 0.1% in June after posting declines for two consecutive months (-0.4% in May and -0.2% in April) and a sharp increase in March (+1.0%).  Compared to a year ago, the index was down by 2.1%.  The energy index was unchanged, thanks to a 6.0% drop in fuel oil prices.  Gasoline prices rose by 1.0% last month, after falling by 9.6% in May.  Food prices rose by 0.1% last month.  Excluding food and energy prices, the core PPI for finished goods rose by 0.2%, the largest increase since December of 2001.
     The overall PPI for intermediate goods rose by 0.2%, following a 0.5% decline in May.  The index was 2.7% below the year-ago level.  Food prices rose by 0.7% and energy prices increased by 0.5%,.  The core PPI for intermediate goods rose by 0.2%.
     The overall PPI for crude goods declined by 3.6% last month, following a 1.7% increase in May.  This is the largest decline since last December (-7.2%).  Compared to a year ago, the index was down by 11.8%.  Raw material prices tend to fluctuate wildly, and thus are no causes for concern unless the trend persists for a few months.  Energy costs dropped by 8.9% while food prices fell by 0.9%.  Crude petroleum prices dropped by 19.5% and were 18.2% cheaper than a year ago.  Natural gas prices were 20.4% cheaper than a year ago.  The core PPI for crude goods rose by 1.6% last month, within the range of past fluctuations.  (George Huang)
PR: http://www.bls.gov/news.release/ppi.nr0.htm
 

HOUSING "UN"-AFFORDABILITY DATA

     The latest Housing Affordabilty Index (HAI) calculated by the California Association of Realtors makes depressing reading.  HAI measures the percentage of households that can afford a median-priced home.  The State's HAI for May was 27%, down from 34% a year ago.  Los Angeles County was more affordable at 32%, but it's down from 37% a year ago.  Orange County's 22% reading was the lowest in Southern California, and it was down from 29% a year ago.  Ventura County's 32% was also lower than the 39% reading just a year ago.  Riverside-San Bernardino was the most affordable area at 44%, down slightly from 47% a year ago.  Down south, San Diego's 20% reading was even lower than Orange County's numbers, and it was down from 26% a year ago.  Up north, the San Francisco Bay Area had an HAI of 17%, down from 20% a year ago.  Santa Clara County's 20% reading was also slightly lower than the 22% reading a year ago.  To find the most affordable housing, you'll have to go to the High Desert area where the HAI is 66% in May, down from 69% a year ago.
     Before you jump to quick conclusions, remember that the income numbers are state-wide and wealthier households tend to live in more expensive areas.  Therefore, these numbers do not reflect homeownership rates of respective areas.  But the trend is clear--housing statewide is getting more and more unaffordable by the day.  Some of the younger population may have to give up on the dream of homeownership, at least for now.  (George Huang)
PR: http://www.car.org/index.php?id=MzEwMTg=
 

MAJOR BUSINESS EXPANSION

     The Los Angeles five-county area recorded a lower level of major business expansion activity during the first half of 2002 compared to the same period last year.  LAEDC defines a "major business expansion" as a lease or building permit of at least $1 million or 200,000 s.f.  LAEDC identified a total of 59 expansion projects for the 6-month period, compared with 196 last year.  Business investment has definitely slowed down.
     Performances were down across the L.A. five-county area except for the Riverside-San Bernardino area, which saw a slight increase of 3 to a total of 28.  Los Angeles County saw its number of major projects slide down by 11 to a total of 79.  Orange County’s level dwindled by 27 to a total of 48.  Ventura County also experienced the pinch, with 4 major expansions compared with a first half 2001 level of 6.
     The value of major business expansions totaled nearly $1.2 billion, a decrease of 27.6% from the same 6-month period in 2001.  Once again, the Riverside-San Bernardino area was up, posting a slight increase of 17%.  Los Angeles County had the largest dollar volume of major expansions, a total of nearly $706 million.  However, it was down by 32.3% from the same period last year.
     By industry sector, Business Services posted the highest number of projects (71), with law firms leading the way.  The next largest number of major expansions was in technology with 16, followed by furniture with 11.  The apparel, auto, entertainment, and logistics sectors followed close behind with 8 each.  (Candice Flor)
Data & chart: http://www.e-edge.org/special/BER-2002-06.pdf
(Candice Flor is the Research Project Manager at LAEDC.)
 

LOCATION PRODUCTION ACTIVITY WEAK IN JUNE

     The June data from the Entertainment Industry Development Corporation on off-lot production activity was in a word disappointing (and its news was somewhat counter to the June jobs data).  There had been some recovery in evidence in recent months, but June was down 19.0% over the year.  The culprit was feature films, which dropped by 38.9% to 614 days.  (However, the June 2001 off-lot production day count of 1,005 was at the end of the production rush.  In July 2001, the number of feature production days slumped to 415.) TV was also weak, with a decline of 18.7%.  The other two sectors, commercials and music, were up, by 26.6% and 20.7%, respectively.
     According to the Hollywood Reporter, the number of films in "preparation" was up dramatically, 106 at last report compared with 62 a year ago.  However, this hasn't yet translated into increased filming activity on local streets, and the finger is being pointed more vigorously at run-away production.  Oh, Canada!  (Jack Kyser)
 

ENERGY WATCH

     This section is back now that the energy crisis is once again on our radar screens.
>> Demand:
  *  Hot weather across the nation led Cal ISO to declare power emergencies twice last week--Stage 1 on Tuesday and Stage 2 on Wednesday.  People were reminded once again by these declarations of the need for conservation.  No rolling blackouts were needed, however.  Some users under interruptible contracts were forced to reduce their power usage so everyone else can keep their air conditioners on.
  *  The "20/20" rebate program is back for this summer.  Cut power use by 20% (as compared to similar periods in 2000, not 2001) and you get up to 20% off on your electricity bill.  Last year's program was highly successful--34% of residential and 30% of commercial customers met the criteria and got around $290 million in rebates.  However, this year's program applies only to residential households.  You can search for all kinds of energy-related rebates at http://www.consumerenergycenter.org/rebate/index.php .  Check out the database before buying that new appliance.
>> Supply:
  *  Some power plant construction promised last year never materialized.  Financial problems at some power companies, the perceived lower demand for energy, and the lower prices of power since 2000-2001 all played a part in this trend.  This situation bears watching.  Without enough additional sources of power, the State may face continuous power shortage in years to come.
  *  Impact of El Nino -- El Nino is officially here, according to the National Oceanic and Atmospheric Administration (NOAA).  It is expected to bring a milder winter to the northern states and a wetter winter to the southern states.  This should reduce the need for heating during winter months and thus relieve pressure on natural gas prices, which affect electricity prices as well because so many power plants run on NG.  But if El Nino reduces rainfall and snowfall up north (i.e. British Columbia, Washington, Oregon, and Northern California), we may have less hydroelectric power next summer.
>> Financial:
  *  What ever happened to those energy revenue bonds?  According to the California State Treasurer's website, the amounts and sale date are still "to be determined."
(George Huang)
 

RECENT PUBLICATIONS

     LAEDC released several publications in the past few weeks, including:
* International Trade Trends & Impacts -- $40
* LA Stats -- $30 (Census 2000 data not included; see below)
* Census 2000 Statistical Compilation -- free at http://www.laedc.org/census2000
* Manufacturing in Los Angeles -- $35
     These reports all cover the five-county area.  You may order by calling 213-236-4822 or visiting http://www.laedc.org/economic_research/publications.shtml (for secure on-line purchasing).  Your support help sustain our research department (and this free e-mail service).
 

NANOTECHNOLOGY CONFERENCE

     The Nano Republic Conference 2002 will be held this Wednesday, July 17th, from 8am to 6pm at Korn Convocation Hall of UCLA.  This conference on nanotechnology brings together leaders from the related industries, academia, government, and capital markets.  Fields covered include life sciences, info tech, materials, and sensors & security.  Please visit http://www.larta.org/nanorepublic for more information.
 

APARTMENT CONFERENCE

     The Real Estate Conference Group presents "Apartments 2002" conference.  It will be held on Thursday, Sept. 19, at the Beverly Hilton Hotel.  Please visit http://www.realestateoutlook.com for more information.

TRADE SHOWS LISTINGS (Repeat announcement)

     LAEDC is now compiling a comprehensive listing of trade shows in Southern California.  Please send us such information.  Thank you so much.
     Our current listing includes fashion/apparel, textiles, shoes, home furnishings & giftware, and manufacturing.  It's available at http://www.laedc.org/trade_shows.html
 

QUICK STATS:

* BLS: US Producer Price Index for finished goods for 6/02: +0.1% (5/02: -0.4%)
* BLS: US Producer Price Index for intermediate goods for 6/02: +0.2% (5/02: -0.5%)
* BLS: US Producer Price Index for crude goods for 6/02: -3.6% (5/02: +1.7%)
* BLS: US export prices for 6/02: +0.0% (5/02:-0.1%)
* BLS: US import prices for 6/02: -0.6% (5/02: +0.1%)
* Cal Assn of Realtors: CA Housing Affordability Index for 5/02: 27% (4/02: 27%)
* Cal Assn of Realtors: LA County Housing Affordability Index for 5/02: 32% (4/02: 31%)
* Cal EDD: California (seasonally-adjusted) unemployment rate for 6/02: 6.4% (5/02: 6.4%)
* Cal EDD: California nonfarm employment for 6/02: +40,800 (5/02: +41,400)
* Cal EDD: LA County (seasonally-adj.) unemployment rate for 6/02: 7.1% (5/02: 7.0%)
* Cal EDD: LA County nonfarm employment for 6/02: -800 (5/02: +5,400)
* Census: US business sales for 5/02: -0.4% (4/02: +1.7%)
* Census: US business inventories for 5/02: +0.2% (4/02: -0.2%)
* Census: US wholesale trade for 5/02: -0.2% (4/02: +1.5%)
* Census: US wholesale for 5/02: +0.1% (4/02: -0.9%)
* Census: US retail sales for 6/02: +1.1% (4/02: -1.1%)
 

QUICK REMINDERS:

* Wednesday: Nano Republic Conference 2002, Korn Convocation Hall of UCLA, 8am, http://www.larta.org/nanorepublic

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