Los Angeles and surrounding counties should see modest employment growth in 2006, according to a pair of economic forecasts released last Thursday by the Southern California Association of Governments.
The forecasts from California State University Long Beach and California State University Fullerton expect higher interest rates to cause a slowdown in the region’s housing market, though not a collapse in housing prices. That, in turn, will lead to a slowdown in construction employment, which has been one of the major engines of job growth for both the county and the region.
CSU Long Beach is the more bullish of the two forecasts for Los Angeles County, calling for 1.1 percent growth in nonfarm payrolls in 2006. A slowdown in construction employment will be somewhat offset by growth in manufacturing and continued growth in tourism-related jobs.
The Fullerton forecast predicts that manufacturing will continue to shed jobs in 2006, though at a lower rate than in 2005. As a result, nonfarm payrolls will grow only 0.6 percent, or by about 20,000 fewer jobs than the Long Beach prediction.
Both forecasts say that surrounding counties will do significantly better in terms of percentage job growth in 2006, with Riverside/San Bernardino counties leading the pack. While home price appreciation may slow in those counties, so many housing projects are on the books that construction employment is expected to remain robust.
Amgen trials
Biotech giant Amgen Inc. plans to substantially boost research and development this year to support late-stage clinical trials on several promising drugs, including two cancer treatments, the Thousand Oaks biotech announced last week at its 2006 business outlook for Wall Street analysts in New York.
R & D; funding may rise as much as 40 percent, from $700 million to $900 million, as trials progress for the osteoporosis drug denosumab and breast cancer drug AMG 706. Also in the mix is the colon cancer drug panitumumab, which could enter the formal U.S. regulatory approval process as soon as this month.
Amgen warned that the substantial R & D; investment, with as many as 54 new studies planned, likely will slow earnings growth in 2006. Officials said that earnings per share likely would grow no more than 16 percent, even when adjusted to exclude items such as the cost of expensing stock options and share dilution related to the upcoming purchase of Hayward-based Abgenix Inc. That compares to the company’s 33 percent earnings per share growth in 2005.
The company also said it expects revenue to rise 12 percent to 16 percent this year compared with 18 percent growth in 2005. “We think the growth drivers in 2006 will be the same as in 2005, led by Aranesp, Neupogen/Neulasta and Enbrel,” said Chief Executive Kevin Sharer.
For 2005, Amgen reported it earned $3.7 billion, or $2.93 a share, compared with $2.4 billion, or $1.81 per share, for 2004. If not for the acquisitions and other special expenses, Amgen said it would have earned $4 billion in 2005 compared to $3.1 billion in 2004, a 28 percent increase.
In the fourth quarter, Amgen credited strong sales of its drugs for treating anemia and chemotherapy-related infection with increasing net income 20 percent to $824 million, or 66 cents a share. Revenue rose 12 percent to $3.27 billion.
Deborah Crowe, Howard Fine
