e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]The Bureau of Labor Statistics released its latest U.S. Labor Market Report on Friday, covering the U.S. employment situation in September. The news continued to be downbeat, though less so than earlier in the year. Total nonfarm employment fell by -263,000 jobs in September, compared with revised losses of -201,000 jobs in August and -304,000 jobs in July. The average monthly decline during the third quarter of 2009 was -256,000 jobs, well below the second quarter average loss (-428,000 jobs/month) and much smaller than the first quarter average loss (-691,000 jobs/month).
Government payrolls decreased by -53,000 employees in September, the fifth consecutive monthly decline. Employment in the private sector dropped by -210,000 jobs, the twenty-second consecutive monthly decline. On the plus side, the private education & health care services sector reported a very small increase in job counts (only +3,000 jobs). Also, employment did not change last month in the information sector (publishing, motion pictures, communications, and internet related industries). The biggest payroll declines over the month were reported by retail (down by -69,000 jobs), construction (-64,000 jobs), and manufacturing (-51,000 jobs).
Compared with September 2008, nonfarm employers in the U.S. have sliced payrolls by -5,785,000 workers, a decrease of -4.2%. Private-sector employment dropped by -5,653,000 jobs, or -5.0% over the year. As in previous months, the only major private-sector industry group reporting higher payrolls versus last year was education & health services (+354,000 jobs). However, employment also increased in several smaller industries: utilities (+4,500 jobs), waste management & remediation services (+3,200 jobs), motion picture & sound recording (+2,600 jobs), scenic & sightseeing transportation (+2,100 jobs), other information services (includes Internet-only website “publishers,” news syndicates, and libraries & archives, +1,600 jobs), and general merchandise stores excluding department stores (+1,500 jobs). [This list—at six industries—is still short but worth tracking in our search for the economic recovery.]
On the downside, the manufacturing and construction sectors continued to shed large numbers of workers over the year. Compared with September 2008, job counts have plunged by -1,603,000 jobs and -1,093,000 jobs respectively. Manufacturing losses were widespread and led by four distressed sectors: motor vehicles & parts (-192,000 jobs), wood products (-86,000 jobs), furniture manufacturing (-97,000 jobs), and textiles & apparel (-79,000 jobs).
The separate BLS-sponsored survey of households reported that labor market conditions, continued poor in September. The U.S. unemployment rate increased to 9.8% last month from 9.7% in August and 9.4% in July. Joblessness was markedly higher than the 6.2% rate of September 2008 and the highest since June, 1983, following the last deep recession. Comparing the major demographic groups with September 2008, jobless rates for adult men and women have risen by +4.1 percentage points and +2.9 percentage points respectively, while the rate for teenagers jumped by +6.5 percentage points. Over the same period, the unemployment rate for whites and Asians increased by +3.5 percentage points and 3.6 percentage points respectively. Meanwhile, joblessness among black and Hispanic workers grew by +4.0 percentage points and +4.8 percentage points respectively.
Labor market conditions have deteriorated badly in this downturn, and the damages continue to grow. In the 21 months since the recession began (in December 2007), total nonfarm employment has decreased by -7.2 million workers. About 70% of the numerical losses came in manufacturing, professional & business services, and construction. In percentage terms, the ranks of temporary workers have sustained the biggest losses, with job counts down by -32.8% so far. In addition, the automotive manufacturing sector has plunged by -32.4%. While the month-to-month rate of employment decline appears to be slowing, the nation’s labor markets are still extremely troubled. (Nancy D. Sidhu)
PR: http://www.bls.gov/news.release/pdf/empsit.pdf
The U.S. Bureau of Economic Analysis (BEA) has just released real gross domestic product growth for 2008 by metropolitan area. For the U.S. as a whole, preliminary estimates of real GDP growth in metropolitan areas slowed from +2.0% in 2007 to +0.8% in 2008.
How did California’s metro areas perform in 2008? Los Angeles-Long Beach-Santa Ana (Los Angeles and Orange Counties) saw GDP growth ease to +0.3% in 2008 from a lackluster +0.9% in 2007. The Riverside-San Bernardino area was in negative territory in 2008 with a -1.3% decline after a -0.8% drop in 2007. San Diego County turned in a +2.6% gain in 2008, an uptick from 2007’s +1.7% increase. Ventura County’s real GDP fell by -4.5% in 2008, after a +1.3% advance in 2007.
To the north, the San Francisco-Oakland-Fremont metro area (the San Francisco and Oakland areas combined) was flat in 2008 (0.0%), after a +2.5% advance in 2007. The San Jose-Sunnyvale-Santa Clara area saw a sharp slowdown in 2008 to +1.3%, after a robust +9.3% gain in 2007.
The BEA analysis also tracked contributions to GDP growth by industry. In the Los Angeles area, the biggest drags on growth in 2008 came from construction (-0.41 percentage points – pp), trade (-0.37 pp) and financial activities (-0.27 pp). In the Riverside-San Bernardino area, the brakes were applied by construction (-1.27 pp), trade (-0.63 pp) and durable goods manufacturing (-0.28 pp). In San Diego County, 2008 activity was retarded by construction (-0.35 pp) and trade (-0.22 pp). A host of sectors contributed to Ventura County’s dismal performance in 2008: nondurable goods manufacturing (-2.07 pp), construction (-0.51 pp), durable goods manufacturing (-0.47 pp), and trade (-0.41 pp). (Jack Kyser)
PR: http://www.bea.gov/newsreleases/regional/gdp_metro/gdp_metro_newsrelease.htm
As expected, sales of autos and light trucks crashed in September. Without the incentives provided by the cash-for-clunkers program, total light vehicle sales for the month were 9.2 million (seasonally adjusted annual rate or SAAR), down by -26.7% from September 2008 and down by -34.6% from August when sales soared to 14.1 million.
Total car sales, including both foreign and domestic models fell by -20.3% from twelve months earlier (to 5.0 million SAAR). Foreign auto sales were -13.2% below last September (at 1.8 million SAAR), while domestic auto makers saw sales plummet by -23.7% (to 3.3 million SAAR).
Combined sales of foreign and domestic light truck models declined again – falling by -33.0% over the last twelve months, and by -30.6% from August, to 4.2 million vehicles. Sales of imported trucks fell by -26.0% over the year to just 0.83 million. Sales of domestic light trucks actually surpassed domestic car sales in September: 3.8 million units were sold (compared with 3.3 million cars), but this still represented a decline in truck sales of -34.5% from a year ago.
It came as no surprise to anyone that September auto sales fell back to levels more in line with pre-incentive numbers although the drop was a little larger than some industry analysts had been expecting. September sales were lower than in the months leading up to the cash-for-clunkers program. However, because of strong sales in July and August, total sales for the third quarter were up compared with the same period last year.
Automotive sales are expected to continue weak through the fourth quarter, held down by that all-too- familiar trio of high unemployment, low consumer confidence and credit markets that are starting to resemble arctic permafrost. One salutary effect of the pull-ahead in vehicle sales was the drawdown of dealer inventories. After the surge in August, auto makers rushed to replenish depleted inventories, which will help push third quarter GDP into positive territory. (Kimberly Ritter)
PR: www.bea.gov
The U.S. Census Bureau recently released second quarter state tax collections by state and type of tax. Total tax revenues collected across all fifty states declined by -16.6% to $199.7 billion in the second quarter of 2009 compared with $239.5 billion collected during the same period last year. The state of California collected $33.5 billion in taxes during the second quarter, or -14.0% less than the second quarter in 2008 ($39.0 billion).
The results for the “big three” tax categories were mixed. In California, general sales tax revenues declined by -10.2% to $8.3 billion (in spite of an increase in the sales tax rate that went into effect April 1 of this year). A year ago, the state collected $9.2 billion in general sales taxes. Across the nation, general sales tax revenues fell at a slower rate (-9.5%) to $57.4 billion in the second quarter from $63.5 billion last year. Personal income taxes suffered an even larger decline. California personal income tax revenues were down by -33.4% during the second quarter. Californians paid $14.3 billion in state personal income taxes compared to $21.4 billion in the same period last year. Nationwide $71.6 billion of personal income tax revenue flowed into state coffers during the second quarter, a decline of -27.5% compared with the second quarter of 2008. Of the big three, corporate income taxes were the only category that experienced an increase. Across the U.S., corporate income taxes rose slightly (+2.9%) to $17.0 billion from $16.6 billion. The increase was much larger in California. During the second quarter, corporate income taxes surged by +71.9% to $6.2 billion from $3.6 billion last year.
The declines in general sales tax and personal income tax collections reflected the recession’s devastating impact on employment and consumer spending. Tight credit markets further strangled consumer expenditures on large ticket items like automobiles and appliances. The big increase in California’s collection of corporate income taxes was due to an increase in payments made during June and July to avoid a new penalty imposed for understating estimated taxes. (Kimberly Ritter)
PR: http://www.census.gov/govs/www/qtax.html
International Monetary Fund (IMF) World Economic Outlook: The IMF announced last week, in its latest World Economic Outlook (WEO), that the world economic recovery has started. However, it cautioned that the strength of the recovery would be dependent upon rebalancing global demand. The global economic recovery has begun due to the $2 trillion in stimulus packages that governments around the world implemented and the growth from Asian economies. The IMF now projects that the world economy will decline by -1.1 percent in 2009 (compared to the July projection of -1.4 percent). In addition, the Fund now forecasts that the world economy will expand by +3.1 percent in 2010 (rather than the earlier expectation of +2.5 percent).
The WEO also mentioned that the global economy would not see pre-crisis growth rates for quite some time, as the aftermath of the largest economic recession since the Great Depression will most definitely be felt over the next few years. The current recovery would be weak when compared to historical standards, while unemployment would remain a deep concern over the remainder of the year and into 2010.
The emerging and developing economies are expected to grow by +1.5 percent this year and by +5.0 percent next year. The recovery will be led by China and India in 2010. China’s forecast was revised upward as the economy is now projected to increase by +9.0 percent in 2010 (compared to the +8.5 percent growth rate previously forecast). In fact, China is expected to surpass Japan as the second largest economy in sometime in 2010.
Other notable differences from the previous report include the Euro area moving to positive growth in 2010 (from -0.3 percent to +0.3 percent), while the U.S. is now expected to expand by +1.5 percent in 2010 rather than +0.8 percent. Japan’s expected contraction for this year has been lowered from -6.0 percent to -5.4 percent.
U.S. Dollar: The U.S. dollar has weakened against all the major currencies since March 31, 2009, including the Euro, Japanese Yen, British Pound, Canadian Dollar and Chinese Renminbi Yuan. Indeed, the dollar has fallen to a 12-month low vis-à-vis the Euro and has really struggled of late with the Yen. This downward trend was a direct result of the world economy stabilizing since March. In the Fall of 2008, foreign purchases of low-yielding Treasury securities expanded dramatically. These investors desired the safest possible asset classes as the world economy was collapsing. Everyone sought risk-free investments. Hence, demand for the dollar increased leading to a stronger dollar.
However, all of this changed as the global economy began to turn around. Since March investors have been more willing to seek higher returns in return for taking somewhat greater risk. Ultimately, in order for the dollar to rebound, the U.S. economy will need to show more encouraging signs, which could lead to higher rates of return on U.S. assets. This would promote higher net capital inflows instead of capital outflows. (Ferdinando Guerra)
PR: http://www.imf.org/external/pubs/ft/weo/2009/02/index.htm
www.federalreserve.gov
October 19-20: IEDC Economic Development Training Class: Technology-led Economic Development
The Bonaventure Hotel, Los Angeles.
The IEDC in partnership with the LAEDC is hosting a 2-day training session in Los Angeles on technology-led economic development. Technology-led development can enhance the competitive advantage of a region by helping the technology sectors to become a strong base of the regional economy. In this course, participants will be introduced to the legal and financial framework for bringing an innovation to market, including technology protection and product licensing. Learn how to partner with government, industry, universities and the public to make technology a more prominent element of your regional economy.
Friday, October 30: 21st Annual Southern California Visitor Industry Outlook Conference
Pasadena Convention Center, Pasadena
The Collins College of Hospitality Management and PKF Consulting are partnering again to host the 21st annual Southern California Visitor Industry Outlook Conference. The event will take place Friday, Oct. 30 at the Pasadena Convention Center and will be titled "Where? When? & How Long?" Attendees will enjoy a full day of panel discussion from tourism and economic experts about tends in Southern California. PKF Consulting, an international firm of management consultants, industry specialists, and appraisers who provide a full range of services to the hospitality, real estate and tourism industries, will also present its extensive lodging forecast report. This report contains detailed analyses of markets throughout Southern California.
Get tickets now! - Thursday, November 12: The 14th Annual Eddy Awards
6:30 p.m. Reception and Silent Auction. 7:30 p.m. Dinner and Awards Program. The Beverly Hilton.
The LAEDC is proud to announce The Boeing Company as our first confirmed honoree. Join the LAEDC for our annual celebration of economic development leadership in business and government. This signature event is attended by more than 700 of the region’s most influential business, government, education, and civic leaders and has become one of the most prestigious award programs in the state of California.
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