e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]The Bureau of Economic Analysis has released new estimates of corporate profits in the first quarter of 2010 (1q2010). The results sounded quite positive. Seasonally adjusted, total pre-tax profits from “current production” (which exclude inventory profits and include other adjustments) rose by +8.0% during the 1st quarter. This was the same quarter-to-quarter increase as in the 4th quarter 2009 and marked the fifth consecutive quarterly improvement after profits plunged by -22.8% in 4th quarter 2008. U.S. financial industries’ profits grew by +2.7% (annual rate) in the 1st quarter. Meanwhile, nonfinancial industries’ profitability rose by a respectable +10.7%.
Total corporate profits were well up—by +34.7%--compared with 1q2009. The industry details were very interesting and marked a new stage in the budding economic recovery. Profits of U.S. financial industries last quarter were up by a huge +78.8% over the year. U.S. nonfinancial industries’ profits grew by +31.3%. Notable among the latter was an increase of +70.8% (or +$86.1 billion) in the profitability of the manufacturing sector.
Net profits from the “rest of the world” increased by just +5.5% over the year. [FYI, rest of the world profits are defined as the difference between U.S. receipts of profits earned in the rest of the world (which grew by +24.6%) and U.S.-based profit payments to companies and residents in the rest of the world (+94.2%).] (Nancy D. Sidhu)
Source: http://www.bea.gov/newsreleases/national/gdp/2010/gdp1q10_3rd.htm
The U.S. Department of Commerce reported that personal income in California increased by +0.9% in first quarter 2010 after rising by +0.5% in the fourth quarter. This was the second consecutive quarterly increase since the summer of 2008 before the financial crisis broke out. Personal income was up by +0.8% from first quarter 2009, the first annual increase since summer 2008.
Aside from employment and unemployment, personal income is the most general indicator of statewide economic activity that is released on a timely basis. The three components of personal income traced somewhat different paths during the first quarter.
The personal income report provides some interesting details about earnings by industry in the state. On the upside, higher earnings were recorded by seventeen (of 24) industry sectors during the first quarter. From the top, this group was led by: California’s forestry, fishing & related sector (+16.2% over the quarter); administrative & waste services (+3.7%); (private) education (+3.2%); the federal military (+3.1%); and mining (+2.8%). Two sectors—transportation & warehousing and state/local government—reported no change in earnings last quarter.
At the other end of the spectrum, five industries reported lower earnings in the first quarter. From the bottom, these included: real estate & rental & leasing (-4.3% over the quarter); finance & insurance (-2.0%); and utilities (-1.7%). Smaller decreases were reported by construction (-0.5%); and arts, entertainment & recreation (-0.3%). (Nancy D. Sidhu)
Source: http://www.bea.gov/regional/index.htm#state
The total number of housing permits issued in California during May increased by +6.0% to 35,400 units from 33,400 units a year earlier (seasonally adjusted annual rate or SAAR). Single-family home permits plunged by -19.1% to 20,700 units. This was the lowest single-family rate since February 2009’s rate of 18,300 units. In stark contrast, the rate for multi-family homes climbed by +88.5% to 14,700 units, up from May 2009’s extremely low rate of 7,800 units. Over the month, permits for single-family homes dropped by -11.9% while the number of multi-family permits increased by +28.9%. In comparing the first five months of 2010 to the same period last year, we find total new housing permits were up by +15.7%. Single-family home permits increased by +12.5% and multi-family permits rose by +21.2%.
In Los Angeles County, 315 permits were issued in May compared with 559 permits posted a year ago. Permits for single-family homes declined by -34.0% to 136 units, while the number of multi-family units permitted was 179 units compared with 353 (-49.3%) in May 2009. Year-to-date, the total number of housing permits issued was up by +6.6%. During the first five months of 2010, single-family permits rose by +13.9% and multi-family permits increased by +3.2%. (Note: Data at the county level are not seasonally adjusted).
The May numbers for Orange County were somewhat better. The total number of housing permits issued was up by +11.1% (to 200 units) compared with the same period last year; 163 permits (+15.6%) were issued for single-family homes, while the number of multi-family units permitted slipped by -5.1% to 37 units. On a YTD basis total housing permits increased by +18.1%. During the first five months of this year, 638 single-family homes were permitted (+31.5%), while permits for the County’s troubled multi-family sector edged down by -0.9% to 342 units.
In the Riverside/San Bernardino area, housing permits fell by -32.3% to 329 units in May (2,559 YTD). Once again last month, permits for single-family homes accounted for 100% of the total number of housing permits issued in the Inland Empire. For the first five months of this year, single-family permits jumped by +23.4%, while permits for multi-family residences plummeted by -49.6%.
The May permit count in Ventura County was just 22 units (versus 37 in May 2009), but that was enough to push up the total year-to-date count by +17.4% compared with the same period last year. In San Diego County, the total number of units permitted last month was 435 compared with 221 a year ago. Year-to-date, the total number of permits issued was up by +18.7% from the first five months of 2009.
Of California’s 28 metro areas, the San Francisco metro area posted the second worst performance last month (just behind El Centro). Only 50 permits were recorded during May, bringing the current YTD total to 203 (down by -64.1% compared with the same period last year). In the Oakland metro area, a total of 252 permits were issued in May or 1,419 year-to-date (+54.4%). In the San Jose area, total permits for the first five months of 2010 increased by a factor of nearly four. So far this far this year, 972 new housing permits have been issued in contrast to 251 for the same period in 2009. (Kimberly Ritter)
Source: http://www.cirbdata.com/
The report for construction activity through May from the Construction Industry Research Board contained evidence of some stirring in the nonresidential construction sector. In Los Angeles County for five months, industrial permit values were up by +25.8% over the year, and hotels were ahead by +267.3%. However, office permits were down by -67.5% and retail was off by -25.1%. Total nonresidential permit values in the County were behind by only -0.8%.
In Orange County through May, $23 million in industrial permits had been issued versus none last year. Office permits were up by +323.3% while retail was ahead by +21.1%. No hotel permits have been issued in the County year-to-date. Total nonresidential permit values so far in 2010 are up by +9.5%.
Things seem to be picking up in Riverside County as well. No industrial permits have been issued to date, but office permits were up by +405.1%, retail permits were ahead by +81.9%, and hotels were up by +106.4%. Total nonresidential permits in the County year-to-date were up by +30.6%.
The news from San Bernardino County was not as positive. Industrial permits year-to-date were down by -50.0%, and office was behind by -51.5%. Retail, however, was up, but by just +1.0%. No hotel permits have been issued so far in 2010. Total nonresidential permit values for the County are down by -38.8% over the year.
It was a mixed bag in San Diego County. Industrial permit values were down by -95.4%, but office was up by +29.8% and retail was ahead by +73.6%. Hotel permits worth $1.1 million have been issued this year versus none last year. Total nonresidential building permit values in the County so far in 2010 were down by -9.8%.
In Ventura County, things were also uneven. No permits have been issued so far in 2010 for industrial buildings, office or hotels. However, retail permits were up over the year by 66.8%. Total nonresidential permit values in the County were down by -11.2% over the comparable period last year.
In the 9-county Bay Area, the year-to-date picture was also mixed. Industrial permits were up by +352.4% while office was ahead by +167.8%. However, retail was down over the year by -63.7%. No hotel permits have been issued so far. Total nonresidential permit values year-to-date were down by just -1.8%. (Jack Kyser)
Source: http://www.cirbdata.com/
Spending on tourism (adjusted for inflation), a major component of the Southern California economy, rose by +3.9% nationwide during the first quarter of 2010 after falling by -1.5% during the fourth quarter of 2009. In comparison, GDP or total output grew by +2.7% during the same period. Total spending on tourism was $590.8 billion in the first quarter compared to a pre-recession peak of $619 billion in the third quarter of 2007 (a decline of -5.2%). Over the last 12 months, spending on tourism goods and services increased by +9.3%.
Spending on passenger air transportation was up by +4.5% during the first quarter of this year after declining by -9.8% during the fourth quarter of 2009. Spending on accommodations increased by +11.0% after falling by -9.8% in the previous quarter. Spending in the travel-related retail sector was up due to better numbers for recreation and entertainment (+3.1%), shopping (+4.5%) and food services (+6.5%).
Prices for passenger air transportation rose by +13.3% while prices for traveler accommodations fell last quarter, decreasing by -6.4% after rising by +3.1% during the last quarter of 2009.
Although demand for tourism and travel services rose, employment in the travel and tourism industry remained unchanged over the quarter. Employment in air transportation fell for the eighth consecutive quarter (-1.4%) as did employment in traveler accommodations (-1.5%). Balancing job losses at airline and lodging companies, other transportation services added jobs (+1.0%) as did the retail sector: food services (+1.0%) and recreation, entertainment and shopping (+0.1%). (Kimberly Ritter)
Source: http://www.bea.gov/newsreleases/industry/tourism/tournewsrelease.htm
World Trade: The Netherlands Bureau of Economic Policy Analysis, also known as the CPB, announced that world trade volumes dropped by -1.7% in April from the previous month, which had grown by a revised +4.0%. World exports decreased in most regions across the globe with the exception of Japan, Central and Eastern Europe and Latin America. World imports dropped in most regions of the world in April with the exception of Japan, Latin America and Africa & the Middle East. On a monthly basis, the Euro Area saw the largest decline in April on the export side, while Asia experienced the largest contraction on the import side. However, Japan witnessed the largest escalations in both imports and exports during April, which was the complete opposite result from March.
China: The People’s Bank of China announced that it would once again allow its currency, the Yuan or Renminbi, to fluctuate as it did from the summer of 2005 to the summer of 2008. The People’s Bank of China stated that the Chinese economy had stabilized and that growth was no longer the main concern for Chinese officials, as the economy has strengthened over the past year and a half. Currently, the top priority for policymakers is to curtail inflation, as the consumer price index rose above the +3% target in May. The big question going forward will be how much the government allows the currency to appreciate. The central bank has made it very clear that the strengthening will be a very gradual process. Ultimately, one positive outcome of this development will be an increase in U.S. exports for the Los Angeles Customs District (LACD) as exports become more affordable for Chinese consumers and companies. (Ferdinando Guerra)
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Wednesday, July 21, 2010: LAEDC 2010 Mid-year Economic Forecast
7:00 a.m. Breakfast & Networking. 8:00 a.m. - 10:30 a.m. Program. Los Angeles Marriott Downtown.
The LAEDC Mid-year Economic Forecast is the premier source for in-depth economic information and analysis on Los Angeles County and the surrounding areas. Jack Kyser, the Kyser Center for Economic Research Founding Economist, announced his retirement after nearly 30 years as the chief interpreter of the L.A. County economy. This Mid-year Forecast event will be his final official presentation. Jack will be joined by LAEDC Chief Economist Dr. Nancy Sidhu and Dr. Richard Green of the USC Lusk Center for Real Estate as they update the economic outlook for the housing industry, the 5-County Southern California region, California, and the nation in the second half of the program. Our other panel will discuss critical infrastructure improvement projects. L.A. County residents and government organizations have committed more than $50 billion in public dollars to upgrade our region’s infrastructure, but will that be enough money to meet our needs?
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