The Economic Data Global Express (e-EDGE)

v.6 n.49       Released Dec. 9, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

NOVEMBER LABOR MARKETS DOWNBEAT

     The U.S. Bureau of Labor Statistics released its monthly labor market report on Friday, and the news wasn't good.  The nation's unemployment rate rose unexpectedly to 6.0% in November from 5.7% in October.  November's rate matched April as the (so far) current cyclical high.  Looking at the major groups (age-sex-race-ethnicity), joblessness among adult men increased by 0.5 percentage points to 5.7%, while unemployment among teens was up by 2.2 percentage points to 16.8% and by 1.2 percentage points to 11.0% among blacks.  Jobless rates for other groups were the same or near the previous month, with the rate for adult women at 5.0%, for whites at 5.2% and Hispanics at 7.8%.
     The Bureau's survey of employers revealed that total nonfarm payroll employment fell by 40,000 workers, following essentially no change in the previous two months (October was up by 6,000 and September was down by 4,000).  Manufacturing employment declined again, this time by 45,000 workers.  Losses were especially noticeable in fabricated metal products (down by 10,000), electronic equipment (- 11,000), and transportation equipment (-11,000).  Retail job counts fell by 39,000 last month on a seasonally adjusted basis.  Retail employment actually increased, but pre-holiday hiring by department stores and "miscellaneous retail establishments" was lower than usual this year.  Service industries added 50,000 new employees last month, led by health services--with an increase of 27,000--and private educational services, up by 15,000 workers.  However, temporary help supply agencies reduced employment by 23,000 workers, a disappointment.
     Many observers of the economic scene, including Alan Greenspan, have commented that the U.S. economy hit a "soft patch:" i.e., economic growth decelerated in recent months.  November's labor market report shows the result:  a weaker demand for labor.  Things are unlikely to turn up decisively until the economy picks up once and for all.   (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/empsit.nr0.htm
 

IS THERE EVEN A SLIM CHANCE OF ANOTHER INTEREST RATE CUT?

     Having surprised financial markets on November 6th, with a 50 basis-point cut in its key Fed Funds Rate (FFR), the overwhelming expectation among Fed watchers is that no further cut will be made at tomorrow's meeting or for several months ahead.  The Federal Open Market Committee (FOMC) is scheduled to meet tomorrow and its dialog is likely to revolve around the following:
     (a) Unexpectedly, the unemployment rate has jumped to 6.0% in November, an eight-year high, and 40,000 jobs were lost.  The job losses in November were centered in manufacturing and retail.
     (b) Household net worth declined sharply in the third quarter of this year, largely due to falling stock prices and a huge increase in new consumer debt.
     (c) Holiday sales so far have been mixed and the Fed will need to estimate ("guess") how strong or weak the final 3 weeks will be for retailers.
     (d) The European Central Bank cut its key interest rate last week for the first time in 13 months,  by 1/2%  to 2.75% (compared with the U.S. 1.25%).
     (e) The Bank of England held its rate steady at 4.00% last week.
     (f) Several Fed officials have recently expressed concern about continued weakness in the corporate sector.
     Should the Fed worry enough about the factors listed above to warrant another rate cut, even for insurance against weakness in demand in the current quarter and perhaps spilling over into the first quarter of 2003?
     While there is an outside chance that the FOMC will surprise us again with a 25 basis-point cut, this has a low probability of occurrence. Monetary policymakers will want to more evidence of the economy's performance and over a longer period than just the few  weeks since November 6th, before taking the momentous decision of further ease.  A nerve wracking job indeed, but someone has to do it.  (Ken Ackbarali)
 

OCTOBER HOUSING UNUSUAL

     The October housing unit permit data from the Construction Industry Research Board (CIRB) were impacted by fee increases.  According to the CIRB, a large number of cities in Southern California (including the city of Los Angeles) raised permit fees, but other areas in the state saw such increases as well.  The Board noted that November permit numbers were going to be down, because developers pulled permits early to avoid the higher fees.
     The results of these fee increases were rather dramatic in Los Angeles County.  New homebuilding had been running behind 2001, but the 10-month 2002 total is now 9.4% ahead of last year.  Single family permits were even with last year, but the multi-family sector was 17.4% ahead, including a lot of "lofts" in downtown Los Angeles.
     Orange County's 10-month permit total was up by 34.7%, with a big spike in multiples (+121.9%).  The Riverside-San Bernardino area was up by 25.7% over the comparable 2001 period, and the 10-month total of 28,455 units was far ahead of any other area in the state.    However, neither San Diego or Ventura counties got much of a boost from the fee increases.  At 10 months, the former was behind by 12.8%, and the latter was down by 27.1%.
     In the 9-county Bay Area, the 10-month unit total was down from last year by 9.2%, due to weakness in the multi-family sector.  Single family permits were actually ahead of last year by 10.8%.  (Jack Kyser)
 

 SOME SHIFTS IN OCTOBER NONRESIDENTIAL PERMITS

     The CIRB nonresidential permit value report for October was also interesting.  For example, new industrial construction in Los Angeles County had been lagging behind last year, but at 10 months of 2002 the cumulative total had pulled even (+0.1%) with last year (more fee increase impacts?).  Office was still down by 68.0%, but retail permit valuations were still ahead of last year by 5.2%.
     In Orange County at the 10-month mark, both industrial and office permits were still behind last year (by 31.0% and 21.3%).  However, retail permit values pulled ahead of last year, by 6.0%.  In Riverside County at 10 months, office permit values were 34.5% behind last year, but industrial and retail were ahead by 30.9% and 31.3%, respectively.  In San Bernardino County, office was ahead by 18.9%, but industrial and retail were lagging, by 22.6% and 21.1%, respectively.
     In San Diego County, industrial permits continued to run ahead of last year, by 27.4%, but office was off by 27.4% and retail was down by 2.4%.  In Ventura County at 10 months, industrial and office were behind by 53.3% and 81.5% respectively, but retail was ahead by 52.3%.
     In the 9 county Bay Area, industrial permit values were off by 47.3%, while office was down by 63.9%.  Retail also lagged, but by a more modest 5.1%.  (Jack Kyser)
 

CALIFORNIA HOUSING AFFORDABILITY LOWER THAN A YEAR AGO

     Californians once again find themselves having difficulty affording a home.  The latest report from the California Association of Realtors (CAR) indicated that the Housing Affordability Index (HAI), which measures the percentage of households in the State that can afford to purchase a median-priced home, fell six percentage points between October 2001 and October 2002.  The October HAI reading was at 30%, down six points from a revised 36% in October 2001.  The median-price of existing, single-family homes in California stood at $322,730, a 22.7% increase over a year ago.
     Los Angeles County, although unchanged from last month's reading, was down by five percentage points over the year with a reading of 31%.  Orange County also remained the same at 24% but still down from 31% a year ago.  The Riverside-San Bernardino area, one of the most affordable regions in Southern California, has an HAI reading of 45%, down by five percentage points from last year.  Ventura County, though it showed a one percentage point increase from the previous month's reading of 30%, was still down by five percentage points from a year ago.  San Diego remained the least affordable region in Southern California with an HAI reading of 22%, down from 36% a year ago.
     In Northern California, San Francisco Bay Area's HAI reading stood at 21%, down from 25% a year ago.  The Santa Clara region continued to fall with a reading of 27%, compared to last year's 30%.  Santa Barbara County was the least affordable region in California with a reading of only 13%, followed by Monterey at 19%.  The High Desert area was still the most affordable region in the state with a reading of 65%.  Although homebuyers in the Golden State have benefited from record-low mortgage interest rates, the sharp rise in home prices has made homeownership out of reach for many.  (Candice Flor)
 

NOVEMBER LOCATION FILMING ACTIVITY STRONG

     The November location production day report (off-lot filming) from the Entertainment Industry Development Corporation was up by 50.9% over last year, to 2,267 days.  This was not the highest level this year, but represents a welcome return to more normal activity.
     Features were ahead by 90.2%, commercial location days were up by 7.5%, while TV increased by 53.0%.  The only sour note was struck by music, which was down from last November by 8.5% (what's up with MTV?).
     In the meantime, the domestic box office performance continued to be quite strong.  Dollar admissions are up by 14.8% over the like 2001 period to $8.3 billion, while admissions (ticket sales) are ahead by 12.0%  (Jack Kyser)
 

TRYING TO REACH SMALL AND MID-SIZED BUSINESSES?

     LAEDC may have the right channel for you.  LAEDC's Business Resource Guide (BRG) is full of free resources that serve small and mid-sized businesses and is seen as an indispensable reference book for these businesses.  An advertisement in the BRG can reach these businesses at a fraction of the cost of radio and billboard ads.  Our 2003 edition is nearing completion and a few ad spots are still available.  Please call Beverly Dill at 213-236-4820 or e-mail to bdill@laedc.org for more information.
 

VARIOUS EVENT CALENDARS

     To prevent the e-EDGE from listing too many events, we encourage you to visit our events pages:
LAEDC events: http://www.laedc.org/data/events/index.shtml
World Trade Center Association events: http://www.wtcanet.org/index_event.htm
LAEDC's economic development-related events: http://www.laedc.org/events/calendarevent.asp
 

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 unemployment rate for 11/02: 6.0% (10/02: 5.7%)
* BLS: US nonfarm employment for 11/02: -40,000 (10/02: +6,000)
* BLS: US labor productivity for 3Q02 (revised): +5.1% (2Q02: +1.7%)
* BLS: US nonfarm unit labor costs for 3Q02 (rev.): -0.2% (2Q02: +2.2%)
* Census: US new factory orders for 10/02: +1.5% (9/02: -2.4%)
* Census: US factory shipments for 10/02: +1.0% (9/02: -0.3%)
* Census: US unfilled factory orders for 10/02: -0.7% (9/02: -1.0%)
* Census: US factory inventories for 10/02: +0.0% (9/02: +0.2%)
* Federal Reserve: US consumer credit for 10/02: +1.0% (9/02: +3.3%)
* AutoData: US auto sales for 11/02: +3.9% to 16.0 million annual units (10/02: -5.5% to 15.4mil.a.u.)


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