The Economic Data Global Express (e-EDGE)

v.6 n.42       Released Oct. 21, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

U.S. HOUSING STARTS STILL IN TOP FORM

     U.S. housing starts surged by 13.3% to 1.84 million units in September from 1.63 million units in August.  Last month was the highest level of starts since 1986.  Starts of single-family dwellings accounted for all of the increase, posting an 18.2% rise, while starts of multi family units fell by 2.9% last month.  By region, housing activity increased most in the West (up by 24.2%).  Other regions reported smaller but still healthy gains over the month:  the Midwest, up by 11.4%, the Northeast (+9.5%) and South (+9.8%).
     Last month's increase was much higher than expected but does little to change the overall situation of the residential construction industry.  Mortgage rates have ranged from low (around 7%) to even lower (below 6%) so far this year.  Thus, it should come as no surprise that housing starts in 2002 are running slightly above last year's pace, with the current nine-month total up 5.4% over the year.  The outlook for the rest of 2002 is "more of the same."  Mortgage rates have moved up above 6% again, which may cause housing starts to back off some from September's hectic pace.  However, easy mortgage credit conditions available construction loans will support the existing pace of new housing construction for a while longer yet.   (Nancy D. Sidhu)
PR: http://www.census.gov/pub/indicator/www/newresconst.pdf
 

INDUSTRIAL PRODUCTION DOWN IN SEPTEMBER

     U.S. industrial production edged down by 0.1% in September after declining by 0.4% in August.  This was a disappointing performance following seven "up" months.  Manufacturing output fell by 0.3% last month, with the automotive, electrical machinery, and furniture & fixtures industries all dropping more than one full percent.
     July was a strong month, however, and so manufacturing industries registered a 3.3% production increase over the quarter, right in line with their performance during the previous six months.  Production of motor vehicles led the pack last quarter, rising by 21.8% despite declines in August and September.  Defense & aerospace output also increased, by 12.3%.  Meanwhile, output of high technology products rose by 7.7% during the quarter, positive but much slower than the double-digit gains registered during the two previous quarters.  [Semiconductor production has been growing strongly, communications equipment is still declining, and output of computers is rising in the mid single digits.]  On the downside were the furniture and aerospace industries, which registered actual declines last quarter, continuing their year-long pattern of declines.  Industrial production might turn up this quarter.  However, vehicle producers are facing some headwinds on the sales side, which likely will keep any gains in industrial production moderate.  (Nancy D. Sidhu)
PR: http://www.federalreserve.gov/releases/G17/Current/default.htm
 

CONSUMER PRICES STABLE BEFORE THE PORT SHUTDOWN

     The U.S. Consumer Price Index (CPI) rose by 0.2% in September, following a 0.3% increase in August.  (The survey was done before the port shutdown began, and any impact from the shutdown will show up in next month's release of October data.)  Compared to a year ago, the September CPI was up by 2.2%.  Food prices rose by 0.2%.  Housing costs rose by 0.1%.  Energy costs rose by 0.7%, following a 0.6% increase in August.  Gasoline prices were 1.0% higher last month (compared to August) and 26.9% higher than at the beginning of the year.  Airline fares declined by 2.1% last month.  The loss of business travel is hitting airlines' bottom lines hard, and both leisure and business travelers can often find special deals via non-traditional channels such as websites and special promotions affiliated with other merchants.
     The Greater Los Angeles CPI rose by 0.2% in September, following a 0.4% increase in August.  Compared to a year ago, the local CPI was up by 2.6%.  Food prices rose by 0.8%.  Housing costs declined by 0.1%, but were still 4.1% higher than a year ago.  Apparel prices rose by 2.5%, following a 7.1% jump in August.  Energy costs declined by 0.3%, thanks in part to a 0.6% drop in gasoline prices.  Gasoline prices have risen a bit this month, however.
     Next month, we'll find out how the port shutdown affected prices around the nation and here in L.A.  But the real big impact may not be visible until the Christmas shopping season and beyond.  It all depends on the amount of delayed shipments and whether the goods make it to the shelves on time.  Gift certificates offer consumers the chance of delaying purchases and getting a better deal in January when all of the delayed goods will have arrived.  Retailers would rather see delayed sales than no sales at all.  (George Huang)
US PR: http://www.bls.gov/news.release/cpi.nr0.htm
LA PR: http://www.bls.gov/ro9/ro9cpila.htm
LA CPI data: http://www.e-edge.org/special/cpi-la.htm
 

CHINA'S ECONOMY ON A ROLL--IN A TROUBLED WORLD ECONOMY

     China's Bureau of National Statistics announced last week that its economy recorded GDP growth of 8.1% at an annualized rate in the third quarter of this year and 7.9% for the first nine months.  Even if economic activity slows down somewhat in the fourth quarter, 2002 will still beat the official forecast of 7.0% growth and last year's 7.3%.
     Three sources of this "explosive" growth can be identified: (1) Exports rose to $233 billion in the first 9 months of this year, an increase of 19.4% over the comparable period last year;  (2) Foreign direct investment inflows of nearly $40 billion were recorded in the 9-month period, an increase of 23% over the first 9 months of  last year's volume;  and (3) Government spending has accelerated, as a number of large infrastructure projects are underway including the Three-Gorges Dam on the Yangtze River and the expansion of the Port of Shanghai.
     To put these growth figures in perspective, we must look at the impressive 1990s when China's economy turned in an average annual increase of 10.4% (measured by GDP).  This was followed by an 8.0% increase in 2000 and 7.3% in 2001.  Earlier fears of economists based in large industrial countries that China's growth rate would slow down to rates around 5.0% simply have not materialized.  As a result, social and political unrest in China has been kept at low levels.  China's accession to membership in the World Trade Organization at the end of last year has induced a flood of foreign investment into China, which will generate more output and employment.
     With a population of 1.3 billion people and the world's 6th largest economy ($1.2 trillion in GDP in 2001), China will likely be a magnet for trade and investment in the near-term and medium-term.  China's merchandise exports of $266.2 billion in 2001 also rank the country 6th behind the United Kingdom and ahead of Canada.  Apparel, shoes, toys, consumer electronics, and computer parts and peripherals are among its leading export products.  China's trade surplus with the United States more than tripled from 1991 ($12.7 billion) to 1996 ($39.6 billion) and more than doubled from 1996 to 2001 ($83.1 billion).
     The visit this week of Chinese President Jiang Zemin to the United States for talks with President Bush is likely to have a political agenda--the Iraq issue and the sale of nuclear material and arms to certain countries.  However, economic issues will also be on the table, including China's import regulations on certain American agricultural products and its regulation of express-delivery companies, as well specific U.S.-China joint venture deals.
     Assuming China's official economic data are valid (and there is some cynicism in the West on this subject), it is truly remarkable that its economic engine remains in high gear, given the many sluggish economies around the world.  From Southern California's trade and investment perspective, the benefits and opportunities for both sides of the Pacific Rim continue to expand.  (Ken Ackbarali)
 

PORTS DIGGING OUT OF THE HOLE... SLOWLY

     Negotiations between the PMA and ILWU continue behind the headlines, and little new information is available.  In the meantime, longshoremen are unloading and loading cargo while merchants and manufacturers cross their fingers.  But how fast can the backlog of ships be reduced to the normal load?  According to the Vessel Traffic Service of the Marine Exchange-Los Angeles/Long Beach Harbor, a non-profit organization that keeps track of ship movement around the two ports, and the U.S. Coast Guard, as of 6am this morning, there were 48 ships at berths in the twin ports, 7 ships inside Long Beach anchorages, and 62 ships outside the breakwater, for a total of 117 ships.  Between 6am and 6pm today, 7 ships are scheduled to arrive and 15 ships are scheduled to depart.  We don't have enough information to speculate on how fast the backlog can be reduced.  Some scheduled arrivals won't happen in the coming weeks because the ships involved are still here waiting to unload their last run.
     Think our ports are in a mess?  Some Asian ports are dealing with a shortage of containers, ships, and overflowing warehouses.  Smaller shippers are struggling to get the precious container space as big clients put pressure on shipping lines to ship their cargo first.  Some factories had to be shut down for a few days because their merchandise couldn't be shipped, they couldn't get the parts they need, or their orders were canceled (because they couldn't arrive on-time).  Had the ports remained shut for a few more days, the impacts on our trading partners would have been much more devastating.  This is especially true for the export-driven countries such as China, whose low-value goods cannot bear the cost of shipment by air.  (George Huang)
Vessel Traffic Service update: http://www.marexlalb.org/vtssr/index.html
 

HOW'S YOUR SCHOOL DOING?

     The California Department of Education (CDE) released the 2002 Academic Performance Index last week.  We've processed the five-county school data into easy-to-print formats for your convenience.  Only key information are included (2002 and 2001 APIs, major racial distribution, API for major racial groups, and teacher credential information).  We are not able to answer any questions about the APIs, however.  Please direct your questions to your local schools or the CDE.  (George Huang)
Cal. Dept. of Educ. API site: http://api.cde.ca.gov/
High schools (9 pg.): http://www.e-edge.org/special/API-2002-High.pdf
Middle schools (13 pg.): http://www.e-edge.org/special/API-2002-Middle.pdf
Elementary schools (54 pg.): http://www.e-edge.org/special/API-2002-Elem.pdf
Small schools (2 pg.): http://www.e-edge.org/special/API-2002-Small.pdf
 

ELECTION 2002 -- VOTER REGISTRATION DEADLINE IS TODAY!

     Today is the deadline for voter registration.  Also in LA County you can vote at 21 locations starting tomorrow.
Universal voter registration form: http://www.ss.ca.gov/elections/english.pdf (must be postmarked by today!)
Early voting sites:
     LA County (touchscreen voting; 10/22-11/1): http://lavote.net/voter/touchscreen/
     Riverside County (10/15-10/29): http://www.co.riverside.ca.us/election/current.htm
Absentee ballot application: http://www.ss.ca.gov/elections/Outreach/absentee/links/english_fill_out.pdf (must be received by Oct. 29)
Polling place locator: http://www.ss.ca.gov/elections/elections_ppl.htm
 

SOUTHERN CALIFORNIA INTERNATIONAL TRADE CONFERENCE

     The 2002 Southern California International Trade Conference will be held on Friday, Nov. 15th, from 7:30am to 2:30pm at the Hilton Universal.  It is presented by Port of LA, LA World Airports, Valley Int'l Trade Association, and Economic Alliance of the San Fernando Valley.  Please call 818-379-7000 for more information.

NEW: AUTO INDUSTRY REPORT

     LAEDC released its report on the auto industry in Southern California.  This report explores the often unknown strength of the L.A. auto industry in design and publishing.  You can download this and many other reports at our new information website: http://laedc.info .
     ERRATA: On the right-hand column of page two, it should be "3,682 used car dealers and 1,145 new car operations in the five-county area."  We apologize for this error and wish to thank Jeff of SingTao Newspaper for catching this mistake.
 

BIOMED NETWORKING FORUM

     You are invited to the Southern California Biomedical Council's 30th Biomedical Industry Networking Forum.  It will be held at the Wilshire Grand Hotel on Tuesday, October 22nd, from 5pm to 9pm.  Please visit http://www.socalbio.org/Calendar/october2002.htm for more information.
 

LAEDC ECONOMIC REPORTS AVAILABLE ONLINE

     In case you missed the notice last week: you can now download LAEDC's various economic reports free-of-charge now at http://laedc.info (yes, ".info" is a valid web address extension).  LAEDC.info is our latest effort to bring you up-to-date, useful, and locally focused economic information that can help your business expand.
 

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 Consumer Price Index for 9/02: +0.2% (8/02: +0.3%)
* BLS: LA Area Consumer Price Index for 9/02: +0.2% (8/02: +0.4%)
* Census: US housing starts for 9/02: +13.3% to 1.843 million annual units (8/02: -1.5% to 1.627mil.a.u.)
* Census: US exports for 8/02: -1.3% to US$81.9 billion (7/02: +0.9% to $82.9bil.)
* Census: US imports for 8/02: +2.0% to US$120.3 billion (7/02: -0.8% to $118.0bil.)
* Census: US merchandise trade deficit for 8/02: US$38.5 billion (7/02: $35.1bil.)
* Conference Board: US Index of Leading Economic Indicators for 9/02: -0.2% (8/02: -0.1%)
* Federal Reserve: US industrial production for 9/02: -0.1% (8/02: -0.3%)
* Federal Reserve: US industrial capacity utilization rate for 9/02: 75.9% (8/02: 76.0%)
 

QUICK REMINDERS:

* Tuesday: Biomedical Industry Networking Forum, Wilshire Grand Hotel, http://www.socalbio.org/Calendar/october2002.htm

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