e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]Figures released last week by the California Employment Development Department (EDD) showed California’s unemployment rate remained the same in December as in November. The seasonally adjusted unemployment rate for both months was 12.4 percent. On a year-to-year basis, the unemployment rate has increased by +3.7 percentage points.
The U.S. unemployment rate also remained unchanged staying at 10.0 percent in the month of December. Thus, joblessness in California continued to be higher than the nation, the trend since September 2008. Four other states have higher unemployment rates than California: Michigan (14.7%), Nevada (13.0%), Rhode Island (12.9%) and South Carolina (12.6%). Three of these four states (all but Michigan) saw unemployment rates rise in December.
Within the five-county Southern California area, all of the counties experienced declines in non-seasonally adjusted unemployment rates during December, the usual pattern. In addition, all of the counties had double digit unemployment rates in December with the exception of Orange County. The San Bernardino County unemployment rate increased from 10.1 percent to 13.6 percent from a year earlier. Riverside County’s unemployment rate also rose on a year-to-year basis, moving from 10.6 percent to 14.3 percent in December. Los Angeles County’s December rate moved upward from 9.5 percent a year ago to 12.0 percent. Ventura County’s December rate increased from 8.0 percent a year earlier to 10.9 percent.
In Orange County, the unadjusted unemployment rate moved upward from 6.6 percent in December 2008 to 9.1 percent in December 2009. San Diego County’s rate rose from 7.5 percent to 10.1 percent over the past year. (Ferdinando Guerra)
PR: http://www.edd.ca.gov/About_EDD/pdf/urate201001.pdf
The December jobs report from the California Employment Development Department was another mixed bag of news. From November to December, the state lost -38,800 jobs (seasonally adjusted), after a revised October to November loss of -17,600 jobs. Month-to-month losses have shrunk in the last 6 months, bringing down the year-to-year loss as well.
Over the year, the state saw a decline in total nonfarm employment (NSA) of -3.9% or -584,300 jobs. Looking at the unadjusted industry detail, the largest losses over the year came in: construction (-116,300 jobs), manufacturing (-106,200 jobs), and retailing (-80,900 jobs). Gains were recorded in health services (+13,600 jobs) and (private) education (+9,400 jobs). Employment services (which includes temporary help) evidently hit bottom in July 2009. The job count has picked up slowly on a month-to-month basis, but is still down year-to-year.
Nonfarm employment in Los Angeles County fell by -2.9% or -115,300 jobs over the year to December. By sector, the largest losses were in: manufacturing (-30,000 jobs), construction (-13,500 jobs), and professional, scientific & technical services (-12,700 jobs). Increases were reported in (private) education (+8,200 jobs), and health services (+1,600 jobs). Employment in motion picture & sound recording industries also looked healthier. From a recent low of 119,200 jobs in July 2009, the employment count has risen to 130,600 jobs in December. That is still down over the year, but only by -1,600 jobs. This improvement reflects a pickup in film and TV production, stimulated by the state’s incentive program as well as a rebound in commercial production.
Orange County’s nonfarm employment in December dropped by -3.3% or by -48,900 jobs over the year. Looking at the industry detail, there were declines in: construction (-10,600 jobs), manufacturing (-9,500 jobs), and retailing and government (both down by -6,300 jobs. Disappointingly, health services recorded no growth over the year, while (private) education was down a tad.
Nonfarm employment in the Riverside-San Bernardino area declined by -4.3% or by -51,100 jobs over the year to December. Declines were recorded in: construction (-12,900 jobs), manufacturing (-8,600 jobs), and retailing (-7,300 jobs). Posting gains over the year were: (private) education (+900 jobs), heath services (+800 jobs), and professional, scientific & technical services (+200 jobs – yes this is small, but the modest recovery is holding up).
San Diego County’s nonfarm employment rolls fell by -3.3% or by -43,100 jobs over the year to December. The largest losses came in: leisure & hospitality services (-7,100 jobs), manufacturing (-6,500 jobs), and construction (-5,700 jobs). (Private) education was flat over the year, while health services posted a decline of -600 jobs.
Nonfarm employment in Ventura County in December declined by -4.0% or by -11,300 jobs over the year. The largest losses were in: retailing (-2,500 jobs) and in construction and manufacturing, which each dropped by -1,900 jobs. A small +200 job increase was reported for education and health services (which are now combined for reporting purposes).
In the Bay Area in December, the Oakland metro area recorded a loss of -3.1% in total nonfarm employment over the year or -31,100 jobs. The San Francisco metro area saw a decline of -4.6% or -45,900 jobs. The San Jose area’s December nonfarm employment dropped by -4.0% or by -36,000 jobs.
Note: we will have to wait until March 5th for the next report on employment in the state and its metro areas. The delay is due to the annual “re-benchmarking” or revision of the data for the last two years -- in this case 2008 and 2009. We expect the new numbers will be lower. (Jack Kyser)
PR: http://www.labormarketinfo.edd.ca.gov/?pageid=1003
Total housing starts fell by -4.0% in December to 557,000 units (seasonally adjusted annual rate or SAAR). This followed opposing changes of +10.7% in November and -10.6% in October. At 456,000 units SAAR, construction of single-family homes in December was -6.9% below the November rate but still +28% above the lows of January-February (357,000 units). In the volatile multi-family sector, however, starts grew by +12.2% in December to 101,000 units. December was the fifth monthly increase in 2009.
The U.S. homebuilding industry has suffered tremendously for four years. Total housing starts in December were -74% below the cycle peak of 2.12 million units registered in first quarter 2006. Single-family starts were down by -73% over this period, while construction of apartments and condominiums plunged by -73%.
Preliminary annual figures reveal that a total of 553,800 housing units were started during 2009, a decrease of -38.8% compared with 905,500 units begun during 2008. Construction of 443,500 single-family units began, down by -28.7% over the previous year. Meanwhile, multi-family starts totaled just 110,300 in 2009, off by a whopping -61.1% from the 2008 pace. Each of these was the lowest level of activity recorded since bookkeeping began in 1959.
Housing industry trends are changing, if slowly. (1) Inventories of unsold newly built single-family homes have declined markedly—by -36.5% from November 2008 to November 2009—and the oversupply of unsold new homes is coming down. (2a) Rates on (fixed-rate) mortgages continue to be relatively low, which helps would-be homebuyers with good credit records. (2b) Many first-time homebuyers took advantage of an $8,000 federal tax credit available through November 2009. This law has been expanded and extended until April 2010. (3) The housing starts numbers themselves are a mixed bag. After dropping steadily from early 2006 to early 2009, single-family housing starts flattened out into a narrow range [456,000 to 508,000 units SAAR] between June and December. (4) However, the multifamily sector's troubles have multiplied. Constrained by the lack of finance and rising vacancies, the number of new projects is still trending down. The downturn in single-family housing appears to be over, but the multi-family sector is still at risk. (Nancy D. Sidhu)
PR: http://www.census.gov/const/newresconst.pdf
Home sales in Southern California maintained their upward momentum in December as the median price in the six-county region rose by +4.0% from a year earlier to $278,000. Last month was the first time the median price increased on a year-over basis since August 2007, when home prices rose by +2.7% to $500,000 (near peak). On a month-over basis, the median price was up by +1.4% compared to November. While most counties posted gains in median price, the Inland Empire lost ground in December. Median prices were down by -6.2% in Riverside County (y/y) and by -14.4% in San Bernardino County. San Diego County saw median prices jump by +10.0%, while Orange County followed close behind with an increase of +9.6%. Prices in Los Angeles County rose by +5.9% and in Ventura County by +6.5%.
A total of 22,328 homes were sold in the SoCal region last month (both new and resale), up by +16.4% from November and by +12.1% from a year ago. December was the eighteenth consecutive month to post a year-over sales gain. Sales of higher end homes provided lift for the upward movement in median price last month. The percentage of higher priced homes sold (above $500,000) increased to 20.2% of all transactions, up from 16.5% in December 2008, and the highest since it was 23.6% in August 2008. Mid to high-end communities like Beverly Hills, Santa Monica and Newport Beach realized year-over-year sales gains while more affordable inland areas such as Moreno Valley and Lake Elsinore recorded year-over declines last month. The supply of foreclosed inventory is also starting to taper off. The increase in the number of higher priced homes reflects a more normal distribution of sales across all price categories and is an encouraging sign that the housing market may be starting to regain a semblance of balance.
There are still some obstacles to overcome, however. December’s foreclosures, while well below peak levels, were still a major force in the market. Foreclosures accounted for 39.6% of re-sales in December, up from November’s 39.0%, but below February’s high of 56.7%. Second, a recovery in the market for jumbo loans (mortgages over $417,000) is necessary to increase sales in pricier areas. These larger loans accounted for 16.7% of home purchases in December – a modest improvement compared to 15.0% in November. Before the credit crunch, however, jumbo loans financed 40% of all home purchases in the region.
There are some positive signs that that housing market in Southern California is starting to regain its footing, but distress indicators are still pulling in the opposite direction, primarily high foreclosure activity and tight credit markets. December was also the first month after the first time buyer credit expired. Prior to its extension, many low-end transactions took place in previous months. On the plus side, mortgage default notices are flattening out (or declining in some areas) and sales of higher priced home are on the upswing. (Kimberly Ritter)
|
Sales Volume |
Median Price |
||||
County |
Dec 2008 |
Dec 2009 |
%Change |
Dec 2009 |
Dec 2009 |
%Change |
Los Angeles |
5,848 |
7,679 |
31.3% |
$320,000 |
$339,000 |
5.9% |
Orange |
2,580 |
2,885 |
11.8% |
$397,000 |
$435,000 |
9.6% |
Riverside |
4,435 |
4,282 |
-3.4% |
$209,000 |
$196,000 |
-6.2% |
San Bernardino |
2,862 |
2,934 |
2.5% |
$180,000 |
$154,000 |
-14.4% |
San Diego |
3,325 |
3,652 |
9.8% |
$300,000 |
$330,000 |
10.0% |
Ventura |
876 |
896 |
2.3% |
$338,000 |
$360,000 |
6.5% |
Southern California |
19,926 |
22,328 |
12.1% |
$278,000 |
$289,000 |
4.0% |
Source: Data Quick News
According to PKF Consulting, the hotel occupancy rate in Los Angeles County in November was 65.2% about the same as 65.6% last year. The average daily room rate ADR) declined over the year by a relatively moderate -8.6% to $140.28. By area in the County the highest occupancy rate was found in Hollywood at 77.6%. However, operators in that area had to cut the ADR by a painful -14.5% over the year. The highest ADR during November was found in Beverly Hills at $326.26, which was also down by -14.5% over the year.
Orange County’s hotel occupancy rate fell to 58.7% from 62.0% last November. The ADR fell by -9.6% to $130.69. By area in the County, the highest occupancy rates were found in Costa Mesa (61.9%) and Orange County Airport (61.4%). The highest ADR in November was in South County at $185.63, down by a painful -14.5% over the year.
San Diego County’s November hotel occupancy rate came in at 61.5% compared with 63.4% last year. The ADR fell by -7.2% to $147.99. By area in the County, the highest occupancy was found in Sports Arena/Old Town at 72.6%. The highest ADR was still in San Diego Bay Areas at $199.80, though this was down by -16.5% over the year. (Jack Kyser)
The U.S. Producer Price Index (PPI) edged up in December at all three levels: crude goods, intermediate goods and finished goods.
Prices in the index for crude materials were a mixed bag last month. Prices in the food and nonfood less energy (core) indexes increased while energy prices fell. The index for crude energy materials dipped by -2.8% in December following a big jump in November (+12.2%). The overall decline was due to sharply lower petroleum prices, which fell by -10.6%. The natural gas index increased by +5.8% and coal was up by +0.4%. The foodstuffs index rose by +3.8% after increasing by +2.6% over the previous month. Several items in this index posted substantial gains: slaughter hogs (+12.5%), slaughter turkeys (+15.0%), milk (+10.8%) and soybeans (+10.1%). Prices rose for almost all items in the core index - the largest gains were for hides & skins (+10.2%) and iron & steel scrap (+12.7%).
Prices for intermediate materials moved up by +0.5% in December after rising by +1.4% in November. The energy goods index rose by just +0.2% after rising by +5.4% during the previous month and by +18.1% for the year. Meanwhile, prices for foodstuffs rose by +1.6% in December following an increase of +0.7% in November. Over the year, intermediate food prices fell by -0.1%. The intermediate core index was up by +0.5% in December but was down by -0.1% compared with December 2008.
In the finished goods category, the index for energy goods slipped by -0.4% after increasing in November by +6.9%. Gasoline prices fell by -3.2% following a +14.2% surge in November. In contrast to the decline in energy prices, the finished food index rose by +1.4%. Fresh fruits and melons were up by +14.0% and pork prices rose by +9.4%. Other significant factors contributing to higher finished goods prices were higher prices for sporting & athletic goods (+1.8%) and jewelry, platinum & karat gold (+3.6%).
Overall, higher food prices drove the increase in producer price inflation in December. Over the year, however, steep increases in energy prices were primarily responsible for pushing up headline inflation, while the increase in core inflation remained modest. (Kimberly Ritter)
PR: http://www.bls.gov/news.release/pdf/ppi.pdf
China: China’s economy expanded by +10.7% in the fourth quarter compared to the same period last year, after increasing by +8.9% in the third quarter of 2009. In 2009 as a whole, the Chinese economy expanded by +8.7% on a year-to-year basis, beating the established government target of 8%.
The fourth quarter’s acceleration can be attributed to more robust government spending and government-supported bank lending programs. The Chinese government has taken aggressive action over the last twelve months, utilizing both fiscal and monetary policy to combat a decline in external demand, particularly from the U.S. and Europe. Exports had been the key component to high growth rates over the past decade. However, the Chinese government had to find a substitute for that engine of growth, which led them to implement a huge stimulus package (4 trillion Yuan or $586 billion). Also, the government rescinded bank lending restrictions and has taken a very pro-active approach in encouraging banks to lend. More recently, the government decided to subsidize household spending on durable goods including consumer electronics, household appliances and automobiles.
However, rising inflation has become a concern. Both consumer and producer prices increased in December by +1.9% and +0.6 percent, respectively after nine months of deflation. Other big concerns are the potential asset bubbles in both the real estate and equity markets. As a result, the Chinese government has begun to slightly tighten policies (recently increased reserve requirements) as the government cannot afford to risk the consequences of an overheated economy. (Ferdinando Guerra)
Wednesday, February 17, 2010: LAEDC 2010-2011 Economic Forecast
7:00 a.m. Breakfast and Networking. 8:00 a.m. -10:30 a.m. Program. At the Los Angeles Marriott Downtown.
The LAEDC Economic Forecast and Industry Outlook is Southern California’s premier source for in-depth economic information and analysis on Los Angeles County and the surrounding areas. This event is attended by more than 600 of the region’s top business, education, civic, and government leaders. The LAEDC’s economic research reports are broadly used by the media, government, and private industry organizations, and have been ranked #1 by the Wall Street Journal. More information TBA.
March 3-5, 2010: CALED and IEDC: Economic Development Credit Analysis
The Westin Bonaventure (404 South Figueroa Street), Los Angeles. Early bird registration (by Jan 20th): $525. Non-IEDC Member Rate: $625.
This hands-on course presents an overview of business financing tools and available private financing options, as well as how the public sector can complement bank financing. Learn how to read financial reports, financial statements, balance sheets and profit and loss statements. Course participants will perform credit analysis by determining how well a company buys and sells to make a profit. Also, they will learn how to determine if the company pays its suppliers on time, collects its receivables, and controls costs to make a profit. Enroll now to understand the basics of structuring deals for small businesses that often combine public and private sector financing programs.
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