The Economic Data Global Express (e-EDGE)

v.6 n.35       Released Sep. 3, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

HOUSEHOLDS:  INCOME NO-GO, SPENDING GO-GO IN JULY

     The U.S. Bureau of Economic Analysis (BEA) estimated that personal income (PI) edged down by 0.1% in July following increases of 0.7% in June and 0.4% in May.  Private industry wage & salary payments accounted for most of the last two months' swings.  Personal income has risen by 3.0% over the last 12 months despite July's decline, a definite improvement over the 1.5% annual increase registered in January.  Disposable personal income (DPI), which excludes personal income tax payments, increased by 0.2% in July and was up by 5.2% over the last year.  DPI has grown faster than PI because income taxes declined by 10.0% (mostly due to federal tax cuts).
     Consumers were out in full force in July, as personal consumption expenditures (PCE) rose by a thumping 1.0% following increases of 0.7% and 0.5% in June and May respectively.  Higher spending for consumer durable goods was the biggest contributor to last month's increase, as auto manufacturers rolled out 0% financing again.  Needless to say, with spending growing faster than income--however measured--the household saving rate fell in July, to 3.4% from over 4% during the previous two months. (Nancy D. Sidhu)
PR: http://www.bea.doc.gov/bea/newsrel/pinewsrelease.htm
 

DURABLE GOODS ORDERS UP--WAY UP--IN JULY

     New orders for manufactured durable goods soared by 8.7% in July following a decline of 4.5% in June and a small increase of 0.4% in May.  The growth in July's orders was the largest monthly gain since October 2001, when orders for motor vehicles surged (first run of "The 0% Story").  July's gain was partly due to "0%--The Sequel" but also reflected substantial gains in orders for many types of business equipment.  (1) Orders for nondefense and defense aircraft & parts more than doubled in July.  (2) Orders for several types of technology related equipment increased as well, with computers & related products up by 13.9% and communications equipment up by 10.4%.  (3) Also, new orders for other types (agricultural, construction, industrial, commercial, etc.) of machinery increased by 11.8% over the month.
     July's strong equipment orders raise the question:  are U.S. businesses finally ready to begin investing in the future again?  Business investment spending for producer durable equipment, especially high technology equipment, has been one of the weakest sectors of the U.S. economy over the past two years.  Some examples of interest to California include (1) shipments (or sales) of aircraft & parts, which were up in July but 17% below their June 2001 peak.  (2) Shipments of computers & related equipment were off by 31% from their July 1999 peak.  (3) As usual, communications equipment was in the worst shape, with July's shipment level a full 48% below the May 2000 peak.  We'll have to wait for several months more to see if July's increase in equipment orders was just a one-month blip or something more substantial.  Cross your fingers!  (Nancy D. Sidhu)
PR: http://www.census.gov/indicator/www/m3/adv/index.htm
 

MANUFACTURING RECOVERY SLOWED IN AUGUST

     The composite Purchasing Managers' Index (PMI) for manufacturing, compiled by the Institute for Supply Management (ISM), stood at 50.5% in August, unchanged from July.  (An index above 50% indicates growth in the manufacturing sector).  The new orders index fell below the 50% mark after scoring above 50% for eight consecutive months.  The production index held on at 55.6%, the ninth consecutive month of expansion.  The index for order backlogs, a leading indicator of production, was below 50% for the second straight month.  Inventories are still being liquidated, but at a slower pace.  Inventory liquidation has been the trend for more than 2.5 years, according to the index.  Employment is still in the declining mode, and probably won't recover until there is a strong recovery on the production side.  In all, the recovery of the manufacturing sector is proceeding but at only a moderate pace.  (George Huang)
PR: http://www.ism.ws/ISMReport/ROB092002.cfm
 

JULY AIRPORT ACTIVITY STILL MIXED

     The July reports from airports around Southern California are in, and it's still a mixed picture.  At LAX, total traffic for the month was down by 15.5% over the year, in line with the declines recorded in May and June.  International passenger traffic was behind by 15.1%, again similar to the results for the two previous months.  At the Palm Springs airport, July activity was off by 10.0%, while the Burbank-Glendale-Pasadena airport saw passenger traffic slip by 6.0% over the year.
     However, the Long Beach airport continued to set a sizzling pace, with July traffic up by 78.0%, while the John Wayne Orange County airport recorded a 2.5% gain, the 4th month in a row of positive numbers.
     The international air cargo numbers for July from LAX were also positive, with total tonnage up by 12.6%, the 3rd month in a row of year-to-year gains.  Imports continued to set the pace, with a 17.5% increase, while exports were ahead by 5.7%.  This was the second month in a row of year-to-year increases for this sector.  (Jack Kyser)
LAX data: http://www.lawa.org/lax/htmlaf/voltraffic.html
SNA data: http://www.ocair.com/airportstatistics/airport_statistics_july_2002.htm
 

JUNE INTERNATIONAL TRADE VALUES

     The June data on the value of international trade at the state's 3 customs districts was also mixed.  At Los Angeles, export values were down by just 0.6%, while import values were up by 9.4%.  For the month, the total value of two-way international trade was up by 6.2% to $19.2 billion.  For 6 months, the total for Los Angeles was $102.3 billion, down by 3.1% from last year.  This number should turn positive towards the end of the year.
     At the San Francisco district, export values declined by 17.0% in July, while  Import values were down by 10.7%, and the month's total of $7.0 billion was off by 13.6%.  San Francisco's 6 month total of $39.1 billion was down by 27.7% from the like 2001 period.  At the San Diego district, July exports slipped by 5.1%, while import values were up by 1.0%.  The July total of $2.8 billion was behind by 1.3%, while the 6-month total of $16.8 billion was ahead of last year by 1.8%.
     At the 6 month mark of 2002, how's Los Angeles doing compared with the New York customs district?  Last year, New York edged ahead, but so far this year it's L.A. by a nose.  New York's 6-month total this year was $99.8 billion while Los Angeles was at $102.3 billion.  (Jack Kyser)
 

GERMANY'S ECONOMY STILL SLUGGISH--A DRAG ON THE EU

     The German Ministry of Finance announced yesterday that it would miss its budget deficit target, 2.5% of GDP, for this year.  The budget is undergoing a thorough revision in light of severe flooding in August, which will place additional burdens on federal expenditures as well as reducing tax revenues.  The government sounded an optimistic note in predicting that its budget deficit for 2002 would not violate the 3.0% of GDP threshold mandated by the Eurozone's Maastricht Treaty.  Several private organizations find this somewhat over-optimistic and have suggested that the overshoot could be much bigger--possibly a deficit of 3.7% of GDP.
     Germany policymakers do not have much maneuvering room to improve the country's  economic performance in the immediate period ahead.  Industrial production and retail sales are continuing their slide. Economic weakness in other EU economies, especially France and Italy, has dampened exports.  The unemployment rate for July was 9.9% and this is likely to have worsened in August (figures to be released on Thursday).
     The European Central Bank (ECB) is due to meet next week, but there is not much hope that an interest rate cut will be approved, despite Germany's weak performance.  The ECB's benchmark interest rate is currently at 3.25% and the inflation rate is 2.6% so far this year, well above its 2.0% target.  Given the ECB's record of protecting its inflation target as its number one priority, help for the sagging European economies will have to come from sources other than lower interest rates.
     Germany's economy is likely to turn in a very lackluster increase in GDP of 0.5% to 0.7% this year, followed by 2.0% to 2.5% in 2003.  Other Eurozone economies will also face some tough sledding in the months ahead.  (Ken Ackbarali)
 

HEAT WAVE => ENERGY WARNINGS

     Wondering about electricity supply during this round of heat wave?  You can get real-time status from Cal ISO at http://www.caiso.com/outlook.html
 

NEED MONEY?  MAYBE WE CAN HELP...  HOW ABOUT SOME *** FREE *** TICKETS?

     LAEDC presents "Money Match LA," an all-day lending and educational conference designed to give local business owners the chance to access the different types of capital solutions available in LA County.  Many lenders with different requirements and focus will be at this conference ready to lend you a hand (or money).  Other business service providers will also be available to help with any questions you may have.  Breakout sessions are available in English, Spanish, Chinese, and Korean.  Register early to sign up for a 30-minute one-on-one session with a lender or financial service provider who can serve your capital needs.  The conference is at LA Convention Center on THIS THURSDAY, Sept. 5, from 8am to 3pm.  The cost is $45 (or $35 if not requesting lunch).  Please visit http://www.moneymatchla.com for registration and other information.
     To show appreciation to our faithful readers, e-EDGE is giving out a limited number of free registrations are on a first come first serve basis.  Just download http://www.e-edge.org/special/moneymatchla.pdf and fax back to the number listed on the form.  Be sure to write "e-EDGE" on the form (where it says "I'm a member of ...") and include your email address in order to receive registration confirmation.  Getting a confirmation e-mail means you are one of the lucky guys.  If you do not get the free registration, we'll also tell you via e-mail.  And yes, you can request meetings with lenders on this free registration.  Lunch is not included.
 

INTELLECTUAL PROPERTY WORKSHOP

     LARTA's Larta University presents a workshop on intellectual property.  Intellectual property can be the primary asset of a technology company, and strategic management of IP can attract capital and monetize revenue, and impact the long-term results of a company's success. This workshop covers the most crucial legal and business strategies any company should know before exposing its technology to a competitive marketplace, including: copyrighting and trade secrets, working with an independent contractor to develop a product, and licensing.  The workshop will be held at IBM Corporation (600 Anton Blvd., Costa Mesa, CA 92626) on Wednesday, Sept. 11th, from 8:30am to 12:30pm or at Microsoft (2700 Colorado Ave., 1st Floor [Artisan Screening Room], Santa Monica, CA 90404) on Thursday, Sept. 12th (same time).  Please see http://www.larta.org/lartau/courses.htm#Session4 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.
 

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.
 

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:

* BEA: US Gross Domestic Product (preliminary) for 2Q02: +1.1% (1Q02: +5.0%)
* BEA: US implicit GDP deflator (prel.) for 2Q02: +1.1% (1Q02: +1.3%)
* BEA: US personal consumption expenditure (prel.) for 2Q02: +1.9% (1Q02: +3.1%)
* BEA: US personal income for 7/02: +0.0% (6/02: +0.7%)
* BEA: US disposable personal income for 7/02: +0.2% (6/02: +0.7%)
* BEA: US personal consumption expenditure for 7/02: +1.0% (6/02: +0.5%)
* BEA: US personal savings rate for 7/02: 3.4% (6/02: 4.2%)
* Census: US new durable goods orders for 7/02: +8.7% (6/02: -4.5%)
* Census: US durable goods shipments for 7/02: +3.1% (6/02: -1.6%)
* Census: US durable goods inventories for 7/02: -0.4% (6/02: -0.3%)
* Census: US unfilled durable goods orders for 7/02: +0.3% (6/02: -1.6%)
* Conference Board: US Consumer Confidence Index for 8/02: 93.5 (7/02: 97.4)
* Conference Board: US Help-wanted Advertising Index for 7/02: 44 (6/02: 47)
* Univ. of Michigan: US Consumer Sentiment Survey for 8/02: 87.6 (7/02: 88.1)
* USDA: US agricultural prices for 8/02: +1.0% (7/02: +2.0%)
 

QUICK REMINDERS

* MoneyMatch LA -- Thursday, Sept. 5.  LA Convention Center.  See the announcement above for more details.  Fax in the request for a free ticket!

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