e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]According to “advance” estimates of the Bureau of Economic Analysis released last week, the U.S. economy grew by +2.4% last quarter (seasonally adjusted annual rate or SAAR). This was the fourth consecutive quarterly increase recorded by BEA since the economy apparently bottomed in the second quarter of 2009. Since then, the level of economic activity has grown by +3.2%. However, GDP last quarter was still -1.1% below the final quarter of 2007 (the recession officially began in December 2007). Thus, the economy is still not back to its pre-recession level.
Progress was evident in most sectors of the economy during the first quarter. They are listed below in order of their contribution to overall economic growth last quarter.
The only major sector making a negative contribution to GDP growth in 2010q2 was imports, which surged last quarter. Because imports enter the GDP calculation with a minus sign, the increase had the effect of subtracting a whopping -4.0 percentage points from the second quarter's GDP growth rate.
To summarize all these details, the U.S. economy continued to recover during the second quarter. The improvement was widespread, with all domestic sectors--U.S. businesses, consumers, the federal government, housing and even state/local governments--recording higher spending. U.S. exports also continued to increase. However, imports of goods and services soared last quarter. This means that part of the improvement in spending was for products made by foreign producers outside the country. U.S. purchases of imported goods and services added to their national GDPs but reduced our GDP.
Note: The BEA called its release an “advance estimate” because all of the figures are still preliminary. When preparing its estimates, the BEA did not know for sure what happened to foreign trade, inventories, or construction (residential, nonresidential and government) in June and had to make some assumptions, which may or may not prove correct. Also, the information on consumer spending during June was still incomplete. We’ll get a clearer picture of the second quarter economy a month from now. (Nancy D. Sidhu)
Source: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
The total number of housing permits issued in California during June increased by +21.1% to 44,200 units from 36,500 units a year earlier (seasonally adjusted annual rate or SAAR). Single-family home permits fell by -9.7% to 26,100 units. In contrast, the rate for multi-family homes soared by +138.2% to 18,100 units, up from June 2009’s extreme low of 7,600 (the lowest point of 2009). Over the month, permits for single-family homes jumped by +20.8% while the number of multi-family permits increased by +22.3%. In comparing the first six months of 2010 to the same period last year, we find total new housing permits were up by +17.0%. Single-family home permits increased by +8.1% and multi-family permits surged by +34.9%.
In Los Angeles County, 711 permits were issued in June compared with 369 permits posted a year ago. Permits for single-family homes rose by +11.5% to 271 units, while the number of multi-family units permitted was 440 compared with 126 (+249.2%) in June 2009. Year-to-date, the total number of housing permits issued in Los Angeles County was up by +17.9%. During the first half of 2010, single-family permits were up by +14.4% and multi-family permits increased by +19.8%. [Note: Data at the county level are not seasonally adjusted.]
The June numbers for Orange County were less encouraging. The total number of housing permits issued plunged by -29.4% (to 267 units) compared with the same period last year: 161 permits (-20.7%) were issued for single-family homes and the number of multi-family units permitted dropped by -39.4% to 175 units. On a YTD basis, total housing permits increased by +4.1%. During the first six months of this year, 796 single-family homes were permitted (+15.7%), while permits for the county’s multi-family sector continued to act as a drag on the county’s housing industry as a whole. Multi-family permits fell by -11.2% last month to 462 units.
In the Riverside/San Bernardino area, housing permits advanced by +29.0% over the year to 726 units in June (3,296 YTD). Permits for single-family homes edged down by -1.5% (to 529), while the number of multi-family units permitted jumped to 197 compared with just 26 units in June 2009. In April and May of this year, no multi-family permits were issued in the Riverside/San Bernardino region. For the first half of this year, single-family permits rose by +18.2%, while the permit count for multi-family residences slumped by -21.4%.
The June permit count in Ventura County was just 16 units (versus 32 in June 2009). Still, with 236 housing permits issued year-to-date, total housing units permitted were up by +12.4% compared with the same period last year. In San Diego County, the total number of units permitted last month was 558 compared with 343 a year ago. During the first six months of 2010, the total number of permits issued in San Diego County was up by +28.0% compared with the first half of 2009. (Kimberly Ritter)
Source: http://www.cirbdata.com/
The report for construction activity through June from the Construction Industry Research Board contained some encouraging signs in the nonresidential construction sector. In Los Angeles County, total nonresidential permit values in the county increased by +1.7% in the first six months of 2010. Hotel permit values were up by +163.4% over the year, industrial increased by +65.4% and retail was ahead by +7.8%. Office permits were down by -40.5%.
In Orange County through June, total nonresidential permit values were down by just -0.8%. Office permits were up by +323.3%, while retail rose by +7.5%. Industrial permits valued at $23 million have been issued so far this year versus none last year. Year-to-date, no hotel permits have been issued in the county.
Nonresidential construction activity in Riverside County has seen a surge in activity during the first half of 2010 - total permits in the county year-to-date jumped by +46.8%. No industrial permits have been issued so far this year, but office permits soared by +418.8%, hotel permits increased by +106.4% and retail permits were up by +56.1%.
In San Bernardino County, nonresidential construction is still in the dumps. Total permit values in the county were down during the first half of this year by -37.1%. Office permits were off by -51.5% compared with this time last year; industrial permits were down by -50.0%, retail fell by -23.6% and no new hotels have been built so far this year.
In San Diego County, total nonresidential building permit values in the county so far in 2010 were down by -11.0%. Still, there were a couple of bright spots. Industrial permits were down by -96.5% and office permits fell by -4.4%, but retail was up by 44.4% and $1.1 million in new hotels were permitted (compared with none last year).
In Ventura County, total nonresidential permit values in the county were down by -7.3% over the comparable period last year. No permits have been issued year-to-date 2010 for industrial or hotel buildings. Office buildings were up by +233.3% (to $4.0 million), and retail increased by +66.8%.
In the 9-county Bay Area, the year-to-date picture was looking better. Total nonresidential permit values year-to-date were down by only -0.2%. Industrial permits were up by +313.7% while office was ahead by +161.4%. However, retail was down by -53.5% and no hotel permits have been issued so far this year. (Kimberly Ritter)
Source: http://www.cirbdata.com/
South Korea: The Bank of Korea announced last week that the South Korean economy expanded by +1.5% in the second quarter compared to a year earlier. The export-led economy (exports makeup nearly 50% of GDP) goods exports rise by over +7% in the second quarter compared to the previous quarter. In addition, both private consumption and government spending increased by +0.8% and +0.1%, respectively on a quarter-to-quarter basis. The manufacturing sector was the beneficiary of higher exports in the second quarter, as manufacturing output climbed by over +5%. The sector was led by strong exports of autos, semiconductor chips and machinery.
The South Korean Won has depreciated by nearly -8% over the past three months. In fact, Asia’s fourth largest economy had the worst performing currency in the continent over that same time period.
The Bank of Korea already raised interest rates in July, to fight inflation joining some of the Los Angeles Customs District’s top trading partners–Thailand, Taiwan and Malaysia. The Asian region has been the first to raise interest rates, as inflation concerns superseded economic growth. With this latest signal of economic strength, the central bank just might move in the direction of further hikes over the coming months.
Japan: There were mixed economic indicators out of Japan last week. On the negative side, Japan’s unemployment rate rose for the fourth straight month in June to 5.3%. In addition, industrial production in June declined the most in over a year, which signifies that economic growth could be slowing. Also, factory output dropped by -1.5% over the month.
On the positive side, exports continued to shine in June, as they rose by nearly +28% compared to a year earlier. This was the seventh consecutive month of export growth. However, that growth may have begun to decelerate as Chinese and European demand began to slow. Exports to China grew by +22% in June relative to +25% in May, while exports to Europe expanded by 9% in June versus +17% in May.
The Yen has reached yearly highs in recent days. In fact, the Yen has appreciated by +8% vis-à-vis the dollar and +12% versus the Euro in the past three months. This is exactly the opposite scenario reported for South Korea. The currency situation has many Japanese policymakers concerned about economic growth in the coming quarters, as a slowdown in exports could lead to more declines in factory production. (Ferdinando Guerra)
Saturday, September 25: Valley Economic Development Center: Where's the Money Access to Capital Business Expo
8:00 AM - 2:30 PM at The Odyssey Restaurant (15600 Odyssey Drive), Granada Hills.
Join us for a day of Education, Resources & Business Growth! Discuss your financing needs with lenders – schedule a one-on-one consultation. Obtain information from a wide range of business resource providers. Attend workshops where these topics will be discussed by panels of experts.
Save the Date! Wednesday, November 10: The LAEDC 15th Annual Eddy Awards
6:30 p.m. Reception. 7:30 p.m. Dinner and Awards Program. At the Beverly Hilton. Contact Justin Goodkind (213) 236-4813 for sponsorship and tickets.
The Eddy Awards® is a cocktail, dinner, and awards gala to support fulfillment of the LAEDC mission to attract, retain, and grow businesses and jobs for the regions of Los Angeles County. The Awards were introduced by the LAEDC in 1996 to celebrate individuals, organizations, and now cities that demonstrate exceptional contributions to positive economic development in the region. We are also pleased to present the 2010 Most Business-Friendly City in Los Angeles County award. The winning city will be announced live at the event.
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