The Economic Data Global Express (e-EDGE)

v.6 n.30       Released July 29, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

NEW U.S. TRADE POLICY AGENDA?  MAYBE

     After 18 months in office, President Bush is about to win Congressional approval for "Trade Promotion Authority" (formerly known as the "fast track authority") for a period of five years.  This will allow the Administration to negotiate trade agreements and present them to Congress for straight up or down votes, without the option to amend them.  Former President Clinton failed to gain renewal of this power in 1994, and American  leadership in the field of international trade negotiations diminished as a consequence.
     The U.S. role in trade liberalization talks within the World Trade Organization (WTO) is likely to be strengthened, especially in the sensitive area of tariff reductions on agricultural commodities.  However, the Bush Administration appears to be adopting a strategy of more bilateral talks with such countries as Chile, Singapore, Morocco and Australia, as well as countries in southern Africa, central Africa, central America, and the Caribbean.  These more focused negotiations, commodity-specific and region-specific, may have better chances of success than the multilateral approach of the WTO.
     An important new feature of the fast track authority legislation is the inclusion of $10 billion of trade-adjustment aid for workers who lose their jobs as a result of trade agreements.  The bill also contains tougher environmental and labor protections than in the past.  The strained relationship, over the past year, between the U.S. and its major trading partners (especially the European Union and Japan) over higher tariffs on U.S. steel imports and higher farm subsidies to U.S. farmers have escalated tensions in global markets.  There is now a chance for the U.S. to foster better trade relations.  (Ken Ackbarali)
 

OOPS!  U.S. MANUFACTURING SETBACK IN JUNE

     New orders for manufactured durable goods (excluding semiconductors) dropped by 3.8% in June, following increases of 0.6% in May and 0.5% in April.  This decline was completely unexpected and highlights the sluggish pace of recovery in this part of the economy.  The only industry reporting higher orders last month was defense capital goods, rising by 18.5%.  Nondefense durable goods orders fell by 4.8%.  Some other dreary details: orders for motor vehicles and parts were down by 3.4%, for the second month of decline; orders for computers and electronic products (again excluding semiconductors) fell by 3.9% after 3 months of growth; and industrial machinery orders were down by 6.7%.  Nondefense aircraft orders plunged by 46.8% last month after soaring by 39.5% in May.
     As if all this weren't bad enough, this report contains two other indicators pointed in the wrong direction.  First, shipments of nondefense capital goods dropped by 2.0% in June, more than wiping out the increases registered in April and May.  This three-month performance was worse than the first quarter and may signal a delayed recovery in business firms' investment in new equipment.  Second, durable goods manufacturers' inventories fell by 0.5% in June, the 17th consecutive month of decline and yet another drag on the economy.  The government's first estimates of second quarter GDP are due out on Wednesday (7/31) along with a revision of the past three years.  The durable goods report implies considerable slowdown in the economy last quarter after a strong performance earlier in the year.   (Nancy D. Sidhu)
PR: http://www.census.gov/indicator/www/m3/index.htm
 

EMPLOYEE BENEFITS COSTS RISING

     The U.S. Employment Cost Index (ECI) rose by 1.0% last quarter and was 4.0% above the year-ago level.  For the private sector, the ECI increased by 1.1% last quarter, the largest increase since 1Q2001.  Private sector wages & salaries increased by 1.0% last quarter, while benefits costs rose by 1.4%.  Compared to a year ago, wages & salaries were up by 3.6% but benefits costs were 5.1% higher.  Despite the downturn in the economy, wage growth has not slowed noticeably.  Firms are trying to keep their best employees despite the hard times so they will be in a position to grow when the conditions turn around.  Benefits costs kept rising at a faster pace, mostly due to increases in health insurance costs.  Rapid increases in health insurance costs have pushed most employers to reduce benefits and transfer some costs onto their employees.  Some small firms to drop coverage altogether.
     The current debate over "patients' bill of rights" must take this trend into consideration.  Whether it leads to higher premiums, reduced or elimination of coverage, less physician participation, or failing insurance companies, the workers these laws intend to protect will eventually be the real victims.  (George Huang)
PR: http://www.bls.gov/news.release/eci.nr0.htm
 

JUNE AIRLINE TRAFFIC MIXED

     Total passenger traffic at LAX in June was down over the year by 15.8%, after a 15.1% slippage in May.  International passenger traffic in June was down by 15.2%, after a 14.4% drop in May.  Officials at LAX point out that this about matches the reduction in capacity put in place by the airlines.  At Ontario, June traffic was down by 9.1%, after an 8.7% decline in May.
     Air cargo tonnage at both airports was up over the year in June.  LAX posted a 0.6% gain, after a string of declines.  Ontario was up by 18.1%, recovering from a May dip.  International airfreight tonnage at LAX was up over the year by 11.4% in June, after a 4.4% gain in May (LAX didn't report these numbers last month).  These are the first year-to-year increases since October 2000.  The May and June gains were fueled by big jumps in import tonnage, 39.8% and 20.3% respectively.  This could reflect some angst about the port labor situation.
     Elsewhere around Southern California, passenger traffic at JetBlue-fueled Long Beach was ahead by 79.0% in June.  John Wayne-Orange County Airport recorded a 4.3% increase in June, continuing the positive trend that emerged in April.  However, the Palm Springs airport saw passenger traffic drop by 12.8% in June.  (Jack Kyser)
 

JUNE RESALE HOUSING ACTIVITY STRONG

     According to the California Association of Realtors (CAR), the resale housing market in California remained strong in June, at least price-wise.   The median price advanced by 21.3% over the year to a new record level of $324,370.  However, unit sales eased by 13.9% from May to June, and were up over the year by just 1.4%.  One factor to consider in the resale housing market is the low inventory, with the CAR's unsold inventory index at 2.4 months compared with 3.4 months a year ago.  This is the number of months needed to deplete the supply of homes on the market at current sales rates.
     In Los Angeles County, the median price in June advanced by 15.7% to $280,720, but unit sales were down by 14.8% from May and over the year by 1.1%.  The trend was similar in the Riverside-San Bernardino area, with the median price up 11.3% to $178,440 (a new record by our notes), but sales eased 3.1% from May and were down by 8.7% over the year.  The story was the same in Ventura County, with the median price up by 11.7% to $361,700, while unit sales declined  by 8.3% from May and by 1.0% over the year.
     The median price of a resale home in Orange County charged ahead in June by 21.1% to $428,130, while unit sales were up, both from May (by 7.2%) and over the year (by 13.3%).  In San Diego County, the median price jumped by 22.4% to $368,650, while sales slipped by 9.5% from May, but were up over the year by 6.3%.
     The Bay Area resale housing market continues to mystify.  In the San Francisco area, the median price moved up by 12.6% to $551,380, but unit sales were up over the year by 17.8%.  In Santa Clara County, the median price moved up by a modest 5.3% to $575,000, while unit sales slipped by 8.3% from May, but were up a healthy 15.8% over the year.  (Jack Kyser)
PR: http://www.car.org/index.php?id=MzEwMzE=
 

JUNE CONTAINER DATA AND MAY TRADE VALUES

     The port of Long Beach reported mixed container numbers for June.  The number of loaded import containers (in TEUs) was up by 16.3% over the year, but the number of loaded export containers was down by 3.3%.  The total number of containers handled in June at Long Beach was up by 15.5% to 418,923.   Combined with the numbers from Los Angeles, the San Pedro Bay ports moved 955,384 containers in June, up by 19.7% over the year.  This was also the second month in a row of 900,000+ container volume, something that was not achieved even in the boom year 2000.
     The data on trade values for May was also mixed.  The Los Angeles Customs District saw no change over the year in export values, while import values were up by 8.8%.  Total trade value for the month was ahead by 5.8% to $17.7 billion. The 5-month total was $83.1 billion, which is still lagging last year by 5.1%, though the gap is narrowing.
     At the San Francisco Customs District, export values were down by 29.2% over the year, while import values declined by 6.9%, the smallest since March 2001.  The total trade value for June was nearly $6.7 billion, a decrease of 18.2%, while the 5-month total of $32.1 billion was down by 30.2%.  The best news for the month was found at the San Diego district, where export values were up by 6.1%, while import values slipped by 0.8% over the year.  Total trade value in May at San Diego was ahead by 1.8% to nearly $3.0 billion, while the 5-month total of nearly $14.0 billion was up by 2.4%.  (Jack Kyser)
Port of Long Beach PR: http://www.polb.com/html/1_about/news.html
 

7TH ANNUAL EDDY AWARDS DINNER -- A night to share in the lives of some of the great visionaries of our time.

     The Eddy Awards are in recognition of excellence in economic development.  The Eddy Award recipients this year have all played an essential role in the evolution of the new downtown LA --they have changed its landscape and made it rich with culture, architecture, opportunity, entertainment and spirit.  More than anything, they've given Los Angeles the vitality necessary to become the thriving metropolitan center that anchors the economy surrounding it.  Please join us on October 10th at the new Cathedral of our Lady of the Angels when the LAEDC awards seven outstanding honorees: Eli Broad, Timothy J. Leiweke, James A. Thomas, Cardinal Roger Mahony, Andrea L. Van de Kamp, Stephan D. Smith and Tonian Hohberg.  Please visit http://www.laedc.org/events/7th_eddy.shtml for more information.
 
 

* * * e-EDGE SUBSCRIPTION DATABASE CLEANUP * * *

     We cleaned up our subscription database last week.  We checked every error message and deleted those said to be unavailable or host not found.  E-mail addresses temporarily unavailable (because of quota violations, for example) were not deleted.  If you know of anyone whose subscription was canceled in error, please have them subscribe again by e-mailing to subscribe@e-edge.org .  No other information is necessary.  Thank you.
 

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 employment cost index for 2Q02: +1.0% (1Q02: +0.8%)
* Cal Assn of Realtors: California single-family home sales for 6/02: -13.9% (5/02: -3.5%)
* Cal Assn of Realtors: California median single-family home price for 6/02: +1.5% (5/02: +1.3%)
* Cal Assn of Realtors: LA County single-family home sales for 6/02: -14.8% (5/02: -1.8%)
* Cal Assn of Realtors: LA County median single-family home price for 6/02: +2.1% (5/02: +0.1%)
* Census: US new durable goods orders for 6/02: -3.8% (5/02: +0.6%)
* Census: US durable goods shipments for 6/02: -1.4% (5/02: -0.2%)
* Census: US durable goods inventories for 6/02: -0.5% (5/02: -0.5%)
* Census: US unfilled durable goods orders for 6/02: -1.4% (5/02: -0.6%)
* Census: US new home sales for 6/02: +0.5% to 1,001,000 annual units (5/02: +7.0% to 996K a.u.)
* Census: US homeownership rate for 2Q02: 67.6% (1Q02: 67.8%)
* Conference Board: US Help-Wanted Advertising Index for 6/02: 47 (5/02: 44)
* Natl Assn of Realtors: US existing home sales for 6/02: -11.7% to 5.07 million annual units (5/02: -0.5% to 5.74mil.a.u.)
* Univ of Michigan: US Consumer Sentiment Survey for 7/02: 88.1 (6/02: 92.4)

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