The Economic Data Global Express (e-EDGE)
The Economic Data Global Express (e-EDGE) is a free, weekly broadcast of useful economic news for the greater Los Angeles area. It covers news and statistics at the international, national, California and local levels. Past e-EDGE newsletters are available online back to July 2000.
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v.17 n. 20 – Released May 22, 2013
THIS WEEK’S HEADLINES:
- April State and Local Employment Report
- Median Home Price in SoCal Nears Five Year High
- Headline Inflation Falls in April
- Wholesale Prices Retreat by 0.7% in April
- Events of Interest
- June 14, 2013: Think Asia, Think Hong Kong
- July 17, 2013: LAEDC Mid-year Economic Forecast: The Future of Energy in the Southland
The Employment Development Department (EDD) released their monthly state and local employment reports for April. Total California employment increased by 10,400 jobs in April, measured in seasonally adjusted (SA) terms. The non-seasonally adjusted figure was an increase of 20,900 jobs.
The year-over-year change showed an increase of 273,100 jobs (SA), which equates to a growth rate of 1.9%. In comparison, the employment growth rate in April for the nation as a whole was 1.6%. California’s private sector added 276,500 jobs over the year, but part of that gain was offset by the loss of 3,400 jobs in the public sector.
Seven industry sectors added jobs over the month: construction, manufacturing, trade transportation and utilities; financial activities; educational and health services; leisure and hospitality; and other services — 23,300 in total with construction posting the largest increase (7,400 jobs). Three categories reported job declines over the month totaling 12,900 jobs: information, professional business services and government.
Almost all private sector industry groups continued to show year-over-year employment gains. The largest increase on a numerical basis was in professional and business services (71,500 jobs, or 3.2%), while the largest gain in percentage terms was construction (44,800 jobs, or 7.7%). The exception was manufacturing, which posted a year-over decline of 10,500 jobs.
California’s unemployment rate fell to 9.0% in April. The unemployment rate was 9.4% in March and stood at 10.7% a year ago. The number of people attached to the labor force was unchanged over the month, but was up by 0.8% over the year. All but one of California’s 58 counties recorded a decline in its unemployment rate in April with the largest year-over-year drop occurring in Trinity County (down 4.4 percentage points). Los Angeles County experienced the smallest unemployment rate decline over the year (1.3 percentage points). The lowest unemployment rate among the California Counties was in Marin (4.6%), while the highest was in Imperial (24.0%).
(Note: County level numbers are not seasonally adjusted, which means there can be large month-to-month fluctuations in jobs counts. A truer picture of how local labor markets are faring can be gained from focusing on the year-over numbers. Annual trends “correct” for the seasonal factors that influence certain industry sectors over the course of the year.)
- In Los Angeles County, the unemployment rate in April finally slipped into single digits, falling to 9.9%, down from 10.2% in March. A year ago, the unemployment rate stood at 11.2%. Last month, total nonfarm employment in Los Angeles County grew by just 200 jobs, but over the year to April, the number of jobs expanded by 76,500, an increase of 2.0%.
- The April unemployment rate in Orange County fell to 5.7% (the fourth lowest in the state) from 6.3% in March. In April 2012, Orange County’s unemployment rate was 7.3%. Nonfarm payrolls expanded by 3,300 jobs over the month and by 26,900 jobs over the year (an increase of 1.9%).
- In the Riverside-San Bernardino area, the unemployment rate in April was 9.6%, down from 10.5% in March and substantially lower than the 11.6% rate posted in April 2012. Nonfarm payrolls rose by 900 jobs over the month and by 18,400 jobs over the year (an increase of 1.6%).
- The unemployment rate in San Diego County in April was 7.0%, down from the year-ago estimate of 8.6%. Nonfarm payroll jobs increased by 2,800 over the month and by 25,100 over the year (an increase of 2.0%).
- In Ventura County, the unemployment rate was 6.9%, down from the year ago estimate of 8.5%. Last month, total nonfarm employment declined by 100 jobs, but over the year ending in April, the number of jobs in Ventura County was up by 4,800 (an increase of 1.7%).
The leisure and hospitality sector posted the largest month-over gain with an addition 2,600 jobs. The second largest gain was in construction (2,300 jobs), most of which were in residential building construction. Payrolls in retail trade expanded by 1,800 jobs, and education and health services employment increased by 900 jobs.
Four industries posted month-over declines: information, government, professional and business services, and manufacturing. Information payrolls contracted by 3,700 jobs last month with over 75% of those job losses concentrated in motion picture and sound recording. The government sector shed 3,600 jobs, mostly in local government (down 3,300 jobs).
Home sales in Southern California were up in April to 21,415 units (new and resale houses and condominiums), an increase of 9.5% compared with April 2012. Pent up demand for move-up homes and high levels of investor purchases continue to be the primary drivers of home sales in the region.
The median price for the six-county region advanced by 23.1% to $357,000 and has now increased on a year-over basis for 13 months. Last month’s median price was the highest since June 2008 when the median price was $360,000. Factors contributing to the rise in median prices across the region include increased demand at a time when inventories are unusually low and the decline in sales of low cost homes relative to increased activity in the higher price ranges.
Investors and cash buyers continue to be a sizable force in Southern California’s housing market. Absentee buyers (mostly investors and some second-home purchasers) bought 30.2% of the homes sold in April. The monthly average for absentee buyer purchases since 2000 (when Data Quick began to compile absentee data) is 18.1%. Investor activity has been instrumental in helping to clear the market of foreclosed and distressed properties, but as prices and interest rates rise, the returns offered from converting single-family homes to rentals will diminish and investor purchases will decline.
Move-up markets are also posting large sales gains from a year earlier. In April, the number of homes sold that were priced between $300,000 and $800,000 jumped by 35.4% year-over-year. This is a price range that includes many move-up buyers. Sales of homes priced over $500,000 increased by 52.7% year-over-year, and sales of homes priced over $800,000 were up by 51.4% over the year.
Foreclosure sales accounted for 12.4% of the Southland’s resale market in April compared with 13.8% a month earlier and 28.8% a year earlier. Foreclosure sales hit a high of 56.7% in February 2009. Short sales made up approximately 17.7% of resales in the six-county region last month versus 24.3% a year earlier.
The housing market in Southern California is well on its way to recovery, but the process will take time. Although prices are rising, home affordability remains good — especially with mortgage interest rates still below 4.0%. However, lending standards for home mortgages remain very tight and have improved only incrementally since the financial crisis. This limits the pool of potential homebuyers to only the very best qualified borrowers and cash buyers.
Sales and median prices across the Southland (April year-over-year percent changes):
- Los Angeles County: Sales rose by 9.7% and the median price increased by 27.4% to $395,000.
- Orange County: Sales were up by 13.9%, while the median prices rose by 27.4% to $535,000.
- Riverside County: Sales increased by 8.1% and the median price moved up by 24.0% to$248,000.
- San Bernardino County: Sales rose by 9.6%, while the median price rose by 24.8% to $195,000.
- San Diego County: Sales increased by 6.5% and the median price moved up by 21.4% to $400,000.
- Ventura County: Sales rose by 10.0%, while the median price climbed by 16.7% to $420,000.
The Consumer Price Index for All Urban Consumers (CPI-U) decreased by 0.4% in April, after declining by 0.2% in March. Over the year, the all items index was up by 1.1%.
- Food prices increased by 0.2% in April. Over the year to April, food prices rose by 1.5%.
- The energy index was down again in April, falling by 4.3%, following a decline of 2.6% in March. The decrease was primarily due to a drop in the gasoline index, which fell by 8.1%. Over the past 12 months, gasoline prices have declined by 8.3%, dragging the energy index down by 4.3%.
- The core index (all items less food and energy) edged up by 0.1% in April. A drop in prices of apparel, airline fares and recreation partially offset gains in the indexes for shelter, new vehicles, used autos, and tobacco. The index for all items less food and energy increased by 1.7% over the year ending in April.
he decline in the April Consumer Price Index was primarily due to lower gasoline prices, which will likely continue for several more months. Consumer Inflation is still benign and continues to give the Fed policy flexibility.
Local Area Consumer Price Index
The Los Angeles CMSA (LA-Riverside-OC) Consumer Price Index decreased by 0.4% last month but was up by 0.9% compared to a year ago.
- The local area food index increased by 0.2% in April, and advanced by 0.6% over the year.
- The energy index declined by 3.9% last month. Over the year to April, the energy index was down by 1.2%, as higher prices for electricity (5.9%) and natural gas service (21.9%) were offset by a decline in the gasoline index (-5.7%).
- The index for all items less food and energy, inched down by 0.1%. Over the past 12 months, the core index has advanced by 1.2%.
(Note: Local consumer price index data are not seasonally adjusted.)
The U.S. Producer Price Index (PPI) for finished goods fell by 0.7% in April after falling by 0.6% in March and rising by 0.7% in February.
Finished food prices were down by 0.8% last month. The index for finished energy goods fell by 2.5%, after falling by 3.4% in March. It was another gasoline-dominated month for the PPI. The 6.0% decline in gasoline prices accounted for 90% of the total energy drop. Core finished goods prices ticked up by 0.1% following an increase 0.2% in each of the previous four months. Over the year, the finished goods index increased by 0.6%.
In the earlier stages of production, prices of intermediate goods slipped by 0.6% in April after decreasing by 0.9% in March. The index for intermediate foodstuffs fell by 0.9% and the index for intermediate energy goods retreated by 2.1%. Prices of core intermediate goods fell by 0.2%, mostly due to drops in prices of primary basic organic chemicals. Over the year, the intermediate goods index decreased by 1.0%.
Prices in the producer index of crude materials for further processing moved down by 0.4% in April. Prices of crude foodstuffs were down by 2.6%, crude energy materials increased by 3.7% and prices of core crude goods fell by 2.8%. Over the year, the crude goods index was up by 3.7%.
Friday, June 14: Think Asia, Think Hong Kong
8:00 A.M.; JW Marriot Downtown LA Live, 900 W. Olympic Blvd., Los Angeles, CA 90802
Think Asia, Think Hong Kong” USA brings together those who want to explore new markets and business opportunities emerging in Asia and the Chinese mainland. Hong Kong’s close trading relationship with both the mainland and the United States, as well as its status as Asia’s international trade and financial center, make it the preferred platform for U.S. companies looking to tap new business opportunities in the region.
Think Asia, Think Hong Kong’s core program will include a symposium and seminars. Mr Gregory So Kam-leung, GBS, JP, Secretary for Commerce and Economic Development of the Hong Kong Special dministrative Region, People’s Republic of China, will be the Los Angeles symposium’s Guest of Honour, and over 100 Hong Kong business leaders will visit the US to explore collaborative opportunities with local companies.
Wednesday, July 17: LAEDC Mid-Year Economic Forecast: The Future of Energy in the Southland
7:00 A.M. to 10:30 A.M.; L.A. Hotel Downtown (previously the Marriott and soon to be the Hyatt) 333 S. Figueroa St., Los Angeles, CA 90071
Innovation plays an important role in enhancing the economic competitiveness of the Southern California region. Join us at the LAEDC Mid-Year Economic Forecast and hear from people and organizations that continue to stretch the boundaries and have proven to be leaders in innovation.