v.20 n. 4 – Released January 28, 2016
This Week’s Headlines:
- December State and Local Employment Report
- Retail Sales in December Disappoint
- Headline Inflation Edges Down in December
- Events of Interest
- February 17, 2016: LAEDC February Economic Outlook
The Employment Development Department (EDD) released the state and local employment reports for the month of December. Total California nonfarm employment increased by 60,400 jobs over the month in seasonally adjusted (SA) terms. The year-over-year change showed an increase of 459,400 jobs (SA). This equated to a growth rate of 2.9%, exceeding the national growth rate of 1.9%. California has consistently added jobs at a faster rate than the nation as a whole since early 2012. California’s private sector added 423,900 jobs (an increase of 3.2%) over the year, while employment in the public sector rose by 1.5% (35,500 jobs).
Industry employment trends remained on track in December with nine of the 11 super-sectors adding jobs over the year: construction; trade, transportation and utilities; information; financial activities; professional and business services; educational and health services; leisure and hospitality; other services; and government for a combined gain of 464,900 jobs. Professional and business services posted the largest gain on a numerical basis adding 124,700 jobs (up 5.0%), while construction continued to claim the largest gain in percentage terms, climbing by 8.6% and adding 59,300 jobs. In spite of a long string of sharp gains, construction industry employment in California remains 21% below the peak level reached in early 2006.
Two industry sectors recorded a decline in December. Mining and logging employment tumbled by 9.6%, a loss of 3,000 jobs, while manufacturing employment declined by 2,500 jobs or -0.2%.
California’s unemployment rate increased slightly over the month, ticking up from 5.7% in November to 5.8%, but was down from the year ago rate of 7.1%. The number of employed persons (civilian) in California now stands at 17,900,400 (an increase of 1.9% over the year), while the number of unemployed workers plunged by 18.7% over the same period to 1,096,100 in December.
(Note: With the exception of the Los Angeles unemployment rate, county level numbers are not seasonally adjusted, which means there can be large month-to-month fluctuations in job counts. A truer picture of how local labor markets are faring is revealed by focusing on the year-over-year numbers. Annual trends “correct” for the seasonal factors that influence certain industry sectors over the course of the year.)
- In Los Angeles County, the seasonally adjusted unemployment rate was unchanged over the month at 5.9%, but was down from the year ago rate of 8.0%. Total nonfarm employment (not seasonally adjusted) increased by 26,300 jobs over the month and was up over the year by 93,700 jobs, an increase of 2.2%.
Leisure and hospitality posted the largest year-over-year gain in employment in December with an increase of 23,900 jobs. Healthcare and social assistance also saw a large increase, adding 22,400 jobs over the year.
Also recording significant job gains were professional and business services (up 19,900 jobs); trade, transportation and utilities (18,000 jobs); construction (8,100 jobs); and government (7,300 jobs).
Three major industry sectors reported year-over-year declines in December: manufacturing employment contracted by 6,200 jobs (5,200 in durable goods); information lost 3,000 jobs (2,800 of which were in motion picture and sound recording), and in the mining and logging sector, job counts fell by 400.
- In December, the unemployment rate in Orange County was 4.1%, down from 4.2% in November and below the year-ago figure of 4.7%. Nonfarm payroll jobs increased by 3,000 over the month and were up by 41,400 over the year (an increase of 2.7%).
- In the Riverside-San Bernardino area, the unemployment rate in December was 5.9% compared with 6.1% in November and below the year ago estimate of 7.0%. The Inland Empire gained 6,900 nonfarm payroll jobs over the month and 47,800 over the year. This represented an increase of 3.6%.
- In Ventura County, the unemployment rate was 5.4%, unchanged over the month but down from the year ago estimate of 6.2%. Total nonfarm employment edged down by 700 jobs over the month but was up by 6,200 jobs over the year (a gain of 2.1%).
Summary: California closed 2015 with impressive job gains and a year-end unemployment rate that was at its lowest since 2006. In Southern California, Los Angeles County alone finished the year with nearly 94,000 jobs added over December 2014, while the other counties experienced significant gains as well. Job gains occurred throughout the year in key industries such as healthcare, professional and business services, construction, and leisure and hospitality.” (Kimberly Ritter-Martinez)
Source: California EDD
U.S. retail and food services sales in December declined by 0.1% over the month, while the 0.2% increase in November was revised up to 0.4%. Core retail sales (total sales less automobiles, gasoline stations and building supply centers) also declined by 0.1% in December.
In spite of the overall decline, six of the 13 major retail sectors posted gains in December, some of them quite solid. Sales at furniture and home furnishings stores advanced by 0.9%; sporting goods, hobby, book and music stores matched that gain, while restaurants and bars posted an increase of 0.7%. Other winners included building material and garden supply stores (0.7%); nonstore retailers (0.3%); and health and personal care stores (0.2%).
Indirectly contributing to the December decline was the flat reading for motor vehicles and parts dealers. Auto sales make up about 20% of total retail sales, and up until December, had been a major driver of U.S. retail sales. The largest percentage declines were posted by miscellaneous retailers (-2.0%) and nonstore retailers (-1.1%). Sales were also down at electronics and appliance stores (-0.2%); food and beverage stores (-0.3%); clothing stores (-0.9%); and general merchandise stores (-1.0%).
On a year-over-year basis, total retail sales in December were up by 2.2%. Most major sectors are reporting year-over-year gains with the exception of electronics and appliance stores (-3.8%) and gasoline stations (-14.6%). Department stores, a subsector of general merchandise stores (which eked out a 0.1% gain over the year), were down by 2.1% over the year. The biggest winners over the year were sporting goods, hobby, book and music stores (up 7.6%); nonstore retailers/e-commerce (7.1%); and restaurants and bars (6.7%).
Retail sales closed the year on a disappointing note, up by only 2.2% over the year compared with 3.5% for all of 2014. Holiday sales also fell short of expectations, coming in at 3.0%, well below the National Retail Federation’s forecast of 3.7%. While consumers are saving substantial sums at the gasoline pump, it has not translated into increased spending and stayed just that – savings. The national saving rate was 5.2% year-to-date in November versus an average of 4.9% for 2014. (Kimberly Ritter-Martinez)
Source: US Census Bureau
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1% in December (seasonally adjusted), but was up 0.7% over the year (not seasonally adjusted). The 2015 December-to-December increase, the second smallest such increase in the last 50 years, was slightly below that of 2014 (+0.8%) and well below the average of the last decade (+1.9%).
- Overall, the food index ticked down by 0.2%. Following the same trend seen last month, the prices for food at home vs. away from home continued to diverge. Specifically, the food at home price index fell 0.5% (-0.4% over the year), as five of the six major food component indexes decreased. The meats, poultry, fish and eggs index saw its largest decrease since 1979 (-1.4%). Prices for food away from home, on the other hand, rose 0.1% (+2.6% over the year). Overall, the index for food increased by only 0.8% in 2015, relative to 3.4% in 2014. These last two years have been on opposite ends of the 2.5% average price increase of the last decade.
- The continued decline in energy prices were behind December’s decline in headline inflation. The energy index fell 2.4% in December, on the heels of a 1.3% decline in November. All major component prices were down, led by energy commodities (-7.8% for fuel oil, -3.9% for gasoline). Over the year the energy index declined 12.6% after declining 10.6% in 2014. These recent declines have pulled the decade’s average energy index growth down to 0.2%.
- The core index (all items less food and energy) moved up by 0.1% in December. Over the year, the index for all items less food and energy was up 2.1%, an acceleration over the 1.6% growth of 2014 and the largest 12-month increase since mid-2012. This growth acceleration for the core index underscores the extent to which headline inflation has been dragged down by declining energy prices of late. Large price increases (more than 2%) were seen in the 2015 indexes for shelter, medical care, motor vehicle insurance, education and tobacco.
Local Area Consumer Price Index
Note: Local consumer price index data are not seasonally adjusted, so month-to-month changes may reflect seasonal influences).
The Los Angeles CMSA (LA-Riverside-OC) Consumer Price Index edged down 0.1% last month, but increased by 2.0% compared to a year ago.
- The local area food index declined 0.8% in December, influenced by declines in prices for food at home (-1.6%). The food index increased by 0.5% over the year.
- The energy index declined 0.4% last month, mainly due to lower electricity prices (-1.6%). Prices for gasoline were also down (0.7%), but prices for natural gas increased (+4.4%). Over the year, the energy index was down 3.0% (gasoline -0.4%, natural gas -7.2%, electricity -6.0%).
- The index for all items less food and energy was flat in December. Declines, led by apparel (-3.7%), were offset by increases such as household furnishings and operations (+1.1%) and shelter (+0.4%). The core index was up 2.8% from December a year ago.
February 17, 2016: LAEDC February Economic Outlook
Omni Hotel: 251 S Olive St, Los Angeles, CA 90012; 7:00 am to 11:00 am
LAEDC’s Annual Economic Forecast & Industry Outlook is an accurate planning tool for the coming year, and the special topic of The Next Generation of Mobility will provide an insider’s look at what lies ahead for our region in the areas of autonomous vehicles, commercial drones, high-speed commuting, goods movement, and the impact of this innovation on our cities.