The Los Angeles region will experience slow but decent economic growth for the remainder of the year despite a sluggish housing market that will persist until at least late 2008, according to a forecast set to be released today.
The 2007-08 midyear report by the Los Angeles County Economic Development Corp., a nonprofit business advocacy group, predicts strength in the tourism and international trade sectors. And it expects that L.A. County will register a record number of nonfarming jobs.
"It's a decent forecast, but there's a higher level of uncertainty than at the first of the year," said Jack Kyser, the group's chief economist and the study's lead writer.
The housing sector remains a major concern, with the report predicting no recovery in the local market until late 2008 or early 2009 -- and even then there will probably be only slight increases in prices and the number of units sold, Kyser said.
Home building in Los Angeles County is slumping, the study found. The number of single-family homes being built is dropping, and unease persists over the boom in downtown condominium and loft development.
Orange and San Diego counties are expected to add few jobs this year because of problems in the sub-prime lending industry in Orange County and overbuilding in San Diego's downtown area.
Riverside and San Bernardino counties are expected to set the growth pace for the region with the highest percentage of new jobs added, although overbuilding is causing the area to grow more slowly than in recent years. In 2008, for example, nonfarming employment in the two-county area should grow by 2.8%, the study foresees; in contrast, the area posted 6.4% job growth in 1999.
The study predicts that Los Angeles County will pass its nonfarming total employment record this year with 4.143 million jobs, a 1.2% increase from 2006. The previous record was set in 1990 with 4.136 million jobs. Employment will continue to grow in 2008, with a predicted 1.5% increase. The report cited job growth in professional, scientific, technical, health, and leisure and hospitality services, and job losses in durable goods manufacturing and construction.
Unemployment will remain at low levels -- about 4.8% this year and 5% in 2008, the study says.
Kyser noted that not all areas were improving. South Los Angeles in particular is "moving sideways" in employment growth, he said.
"I'm excited that we've reached a new record level of employment, but I'm also disappointed that it took us so long to get to that level," Kyser said. "We need to pay more attention to a lot of industries and to the overall business environment."
The forecast cited the labor situation in the entertainment industry as a major risk to Los Angeles County over the next year. The expiration of the Writers Guild of America contract in October is leading Hollywood to stockpile filmed content, causing many to worry that production could drop sharply even if a walkout is averted.
But other industries are moving the local economy forward, including tourism, international trade and professional business services, such as law and computer software development, Kyser said. Los Angeles County is expected to see a 0.4% increase in the number of overnight visitors this year, and a 7.9% increase is expected in the value of goods being imported to and exported from the Los Angeles Customs District.