The Economic Data Global Express (e-EDGE)

v.6 n.36       Released Sep. 9, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

WATCHING GRASS GROW

     The Bureau of Labor Statistics just reported on U.S. labor markets in August.  Nonfarm employment payrolls rose by 39,000 jobs last month following gains of 67,000 in July, 34,000 in June, and 22,000 in May.  Since April, the nation's nonfarm payrolls have grown by 162,000 jobs, an increase of 0.12%.  Not much compared to the 1.78 million jobs (or 1.34%) that disappeared between March 2001 and April 2002, but we'll take it.  Manufacturing led the list of industries that lost employees in August, with a decline of 68,000 jobs, the 25th consecutive month of loss.  Other losers included retail trade, transportation & communications, and wholesale trade.  Service industries gained 100,000 jobs.  Help supply firms filled 51,000 positions on net, while health services firms gained 26,000 more.  Construction contractors added 34,000 workers after losing 30,000 in July.  Finally, the government sector added 41,000 positions.  The federal government added about 20,000 airport workers to its payrolls.  Local education districts also added employees.
     The nation's unemployment rate edged down to 5.7% in August from 5.9% in July and June.    Unemployment rates fell for all major sex, age, race, and ethnic groups in August.  The unemployment rate peaked at 6.0% in April after rising by 1.7 percentage points since March 2001.  Thus, the decline in joblessness over the past four months has reversed only a small part of the deterioration that took place during the 2001 recession.
     U.S. labor markets have shown little momentum lately.  The best that can be said is that the movement, such as it is, has all been in the right direction.  Remember:  grass does grow!   (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/empsit.nr0.htm
 

MIXED TRENDS IN HOUSING IN JULY

     The latest data from the Construction Industry Research Board pointed to more of the same -- divergent trends in homebuilding.  For the state in July, there was an increase in units permitted both over the month and year.  At the 9-month mark, the unit count was by 3.9% ahead of last year, with singles up by 6.6% while multiple units lagged by 4.0%.
     The number of permits issued in Los Angeles County in July was up over the month, but the County's 9-month unit count was still behind last year by 12.8% with the multi-family sector especially weak.  Orange County had a wan July, but its 9-month unit count was still ahead of last year by 16.7%.  Riverside-San Bernardino turned in a good performance in July, and its 9-month total was ahead by 20.6% to a state-leading 19,183 units.  July was not a good month for San Diego County, with the unit count down over both the month and year.  At the 9-month mark the County was behind last year by 13.7%.  Ventura County turned in a so-so performance in July, and its unit count continued to trail last year by 30.9%.
     Up in the 9-county Bay Area, July was not exciting for new homebuilding, with the area's 9-month total down over the comparable 2001 period by 10.9%.  The San Francisco metro area lagged by 14.4%, while the San Jose area's permit total trailed by 18.6%.  (Jack Kyser)
 

SOME SHIFTS IN NONRESIDENTIAL ACTIVITY IN JULY

     There were a couple of interesting shifts in the July nonresidential construction data reported by the Construction Industry Research Board.  In Los Angeles County it was business as usual.  The 9-month valuations for industrial permits trailed last year by 11.8% while office was behind by 73.0%.  However, retail was ahead by 19.0% (no obvious Kohl's permits yet).  In Orange County at the 9-month mark, industrial valuations were off by 69.7%, and retail was down by 22.1%.  However, valuations in the office sector were ahead by 13.7%.  This move into positive territory emerged in June, and while brokers say this market is turning around the situation is still a little scary.
     In the Riverside-San Bernardino area, industrial permit valuations for the first 7 months of the year were down by 13.0% (however, Riverside County moved into the plus column in July), while office permits lagged by 26.3%.  Retail permits were ahead by 9.9%, with all the strength in Riverside County.  In San Diego County at 7 months, industrial permits trailed last year by 13.9%, while office was off by 14.6%.  However, retail permits moved into positive territory during July, and were ahead of last year by 22.3%.  In Ventura County, industrial and office both continued to trail last year, down by 53.1% and 91.3% respectively.  Retail was still ahead by 15.9%.
     In the Bay Area at 7 months, industrial permits were behind last year by 51.7%, while office was down by 63.3%.  However, retail permit valuations were ahead by 7.0%.  (Jack Kyser)
 

SECOND QUARTER VACANCY RATES

     The second quarter Real Estate Research Council reports are in, and we went right to the vacancy rate data.  Office vacancy rates in Orange County did ease to 15.4% in the second quarter from 16.8% in the 1st.  However, they were still well above last year's Q2 reading of 8.8%.  Office vacancy rates also edged down in the Riverside-San Bernardino, moving from 13.8% to 13.1%.  In San Diego County, the Q2 rate rose to 10.1%, while in Ventura County there was a modest increase to 14.6%.
     In Los Angeles County in the 2nd quarter, the office vacancy rate moved up to 16.5% from 15.9% in the 1st quarter.  "Central LA" went from 17.3% to 18.5%, while West LA moved from 15.1% to 15.7%.  The San Fernando Valley essentially held even -- 15.6% in Q1 and 15.5% in Q2, while the South Bay enjoyed some easing, from 19.1% to 18.4%.
     The news was better in the industrial sector.  In Orange County the vacancy rate went from 9.7% in the 1st quarter to 9.0% in the second.  The Inland Empire held steady, at 7.7% in Q1 and 7.6% in Q2.  In San Diego County, the Q1 rate was 6.9% and 7.0% in Q2.  In Ventura County the rate moved from 8.7% to 9.0% in Q2.
     In Los Angeles County, the 2nd quarter industrial vacancy rate eased down from 4.6% to 4.3%. "Central LA" was still enjoyed the lowest rate, 3.0% in Q2 compared with 3.2% in Q1.  However, the San Gabriel Valley was hot on its heels with a 3.1% rate last quarter, down from 3.8% in Q1.  The South Bay also saw an improvement, moving from 4.3% to 3.8%.  The industrial vacancy rate also eased in the San Fernando Valley, moving to 7.1% from 7.5% in Q1.  Only the Mid-cities area saw an increase in the 2nd quarter industrial vacancy rate, going from 6.1% to 6.3%.
     We also checked the apartment vacancy rate data (buildings with 100 or more units).   The highest rate in Southern California was found in Orange County, at 5.7% in both the 1st and 2nd quarters.  In Los Angeles County, the rate eased down from 4.8% to 4.1%.  Vacancies also declined in Riverside County, moving from 4.6% to 4.3%.  San Diego County joined in, with the apartment vacancy rate moving from 4.9% to 4.4%.  The rate went up in San Bernardino County (from 4.0% to 4.4%), and in Ventura County (from 3.8% to 4.1%).  (Jack Kyser)
 

CALIFORNIA HOUSING AFFORDABILITY STILL LOW

     California's housing affordability declined once again in July according to the California Association of Realtors (CAR).  The Housing Affordability Index (HAI), which measures the percentage of households that can afford to purchase a median-priced home, was at 28%, down from 32% in July 2001 and was unchanged from June's revised data of 28%.  Los Angeles County remains unchanged from June's reading of 31%, down from 35% a year ago.  Orange County also remains unchanged from June which stood at 22%, down from 28% a year ago.  The Riverside-San Bernardino area remained constant at 43% but still down from last year's reading of 47%.  Ventura County's HAI declined in July to 28% compared to June's 33%, and down 3 percentage points from a year ago.  San Diego still remained at 20%, down from 24% a year ago.  Up north, the San Francisco Bay Area's HAI increased one percentage point from June to 18%, but still down from 20% a year ago.  Santa Clara increased two percentage points from June's HAI and was at 22% in July, but still down from last year's 23%.  The High Dessert region continues to be the most affordable region in California with a reading of 66%, followed by Riverside-San Bernardino area and Sacramento, both have an HAI reading of 43%.  (Candice Flor)
PR: http://www.car.org/index.php?id=MzExNDk=
 

NORTH AMERICA AND ASIA EXPORTS HIT HARDEST BY 9/11

     The World Trade Organization (WTO) has released data (reported in The Economist, a weekly British journal, September 7, 2002) on the impact of 9/11 on international trade.  The data indicate that in the 12 months following 9/11, exports from the United States, Canada, and Mexico combined (North America) declined by an estimated 5%.  In the same period, Asia's exports fell by an estimated 3.5%, reflecting weakness in the  economies of its trading partners.  By contrast, Western Europe saw its exports expand by an estimated 1%, Latin America was up by an estimated 2.9%, and Transitioning Economies (Russia, Poland, Hungary and other former Communist countries) registered an estimated 8% rise in exports since 9/11.
     On the import side, the regional pattern was similar to export performance with one notable exception.  Western Europe, with a decline in imports of 1% (estimated), joined North America and Asia in experiencing a fall off in import trade. For the world as a whole, merchandise trade actually shrank by 1% during the 12 months after 9/11, a testament to recession in many countries, slow growth in others, and the disruption to shipping logistics as new security measures are being implemented.
     As we approach the 1st anniversary of 9/11, the world economy continues to have soft spots.  European Union finance ministers, meeting in Copenhagen last weekend, have slashed in half their estimates of EU economic growth for the second half of 2002.  In addition, Germany, France, Italy, and Portugal are likely to experience difficulties reducing their budget deficits for fiscal 2003 and 2004.  North America and Asia should pull out of the doldrums in 2003.  Latin America remains problematic as prospects for Brazil and Argentina are still somewhat tentative.
     World economic developments should turn positive in 2003 and growth in imports and exports will be broadly distributed.  The wild cards that could disrupt any upbeat outlook are another terrorist attack and war with Iraq or in some other part of Asia.  (Ken Ackbarali)
 

THE SOUTHERN CALIFORNIA ECONOMY ONE YEAR AFTER 9/11

     There have been lots of questions asked about the economic impacts of the September 11th attack on Southern California.  The industry that has been hit the hardest is travel and tourism, with hotel occupancy rates generally under 70%, and airline passenger traffic down over the year at most local airports.  International trade is also coping with an evolving menu of security measures, and security at our ports is still a concern (due to their spread out nature).  Most large buildings have installed security checks or actually done some construction to make the facilities more secure, all of which are an expense.
     The region's defense and technology sector has received lots of contract awards, although they have yet to register in the employment numbers.  No huge new assembly lines will develop, but there has been a major investment in R&D facilities.  (Jack Kyser)
 

LONG-TERM ECONOMIC IMPACTS OF 9/11

     How would the post-9/11 world be different in long-term economic terms?  Many have speculated about the changes in air travel patterns, choices of tourist destinations, insurance pricing & coverage limitations, and increased defense spending.  Some of these will hurt certain industries (e.g., airlines and hotels) while benefit others (e.g., defense & private security).  But economists are also concerned about the changes in resource allocation as a result of 9/11.  Resources (e.g., manpower, time, and capital, etc.) spent on many security efforts are resources NOT spent on building up the nation's capital stock and improving productivity.  Therefore the new priorities after 9/11 may take away from potential economic growth for many years to come.  Yet these changes in resource allocation are necessary (though not desirable), and they will help prevent losses that may be even more significant.  They should also instill confidence, which is what keeps consumers spending.  (George Huang)
 

SHOW YOUR PATRIOTISM...

     You can download a PDF file of the US flag at http://www.e-edge.org/special/US_flags.pdf .  On page 2 and on page 6 (the lower-right flag), you can add your own message under the flag image.
 

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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 this 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.  (Repeat announcement)

     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:

* Bank of Tokyo-Mitsubishi: US chain store sales for 8/02: +1.6% over a year ago (7/02: +2.6% o.y.a.)
* BEA: US auto sales for 8/02: +3.3% to 18.7 million annual units (7/02: +10.4% to 18.1mil.a.u.)
* BLS: US nonfarm labor productivity for 2Q02: +1.5% (1Q02: +8.6%)
* BLS: US nonfarm unit labor costs for 2Q02: +2.1% (1Q02: -4.6%)
* BLS: US unemployment rate for 8/02: 5.7% (7/02: 5.9%)
* BLS: US nonfarm employment for 8/02: +39,000 (7/02: +67,000)
* Cal Assn of Realtors: California Housing Affordability Index for 7/02: 28 (6/02: 28)
* Cal Assn of Realtors: LA County Housing Affordability Index for 7/02: 31 (6/02: 31)
* Census: US construction spending for 7/02: +0.0% (6/02: -1.7%)
* Census: US wholesale trade for 7/02: +0.% (6/02: +0.%)
* Census: US wholesale inventories for 7/02: +0.% (6/02: +0.%)
* Census: US new factory orders for 7/02: +4.7% (6/02: -2.5%)
* Census: US factory sales for 7/02: +1.6% (6/02: -0.9%)
* Census: US unfilled factory orders for 7/02: +0.3% (6/02: -1.6%)
* Census: US factory inventories for 7/02: -0.1% (6/02: -0.1%)
* Federal Reserve: US consumer credit for 7/02: +7.8% annualized rate (6/02: +6.4% a.u.)
 

QUICK REMINDERS

* LartaU: Intellectual Property Workshop, Sept. 11th (Costa Mesa) or Sept. 12th (Santa Monica), 213-765-4829

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