Leading Indicators Up in April

June 13, 2000 --The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.6 percent in April. The advance was led by big positive moves in initial claims for unemployment insurance and help wanted advertising. Also increasing were local stock prices and building permits; both were up moderately. Two components, consumer confidence and the outlook for the national economy, were down slightly during the month.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (March) 
Source: University of San Diego 
+ 0.6 % 
Building Permits 
Residential units authorized by building permits in San Diego County (March) 
Source: Construction Industry Research Board 
+ 0.47% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (March) 
Source: Employment Development Department 
+ 1.31% 
Stock Prices 
San Diego Stock Exchange Index (March) 
Source: San Diego Daily Transcript 
+ 0.68%
Consumer Confidence 
An index of consumer confidence in San Diego County (March) 
Source: San Diego Union-Tribune
- 0.21% 
Help Wanted Advertising 
An index of help wanted advertising in the San Diego Union-Tribune (March) 
Source: Greater San Diego Chamber of Commerce 
+ 1.33% 
National Economy 
Index of Leading Economic Indicators (March) 
Source: The Conference Board 
- 0.16% 

April’s advance was the 14th consecutive monthly increase in the USD Index of Leading Economic Indicators. The strength shown in the first quarter of 2000 carried into the beginning of the second quarter, with another strong gain that was larger than in any month in 1998 or 1999. The breadth of the advance weakened slightly in April compared to March, with only four of the six components of the Index up during the month. However, the negatives remain few and slight, and the outlook is for continued solid growth in the local economy through the end of 2000.

The big news in terms of the individual components in the Index in April was the strong performance of the labor market variables. A total of 10,478 initial claims for unemployment insurance were filed in April, which was the lowest monthly total for initial claims since November 1986. This is an indication that the rate of job loss locally has declined dramatically. On the other side of the labor market, help wanted advertising was up sharply for the fourth month in a row. Firms continue to want to hire workers, and, despite the introduction of other venues for finding employees such as the Internet, they are using the newspaper to find them. The strength of these two components is reflected in the continued tight labor market, where the unemployment rate has been below 3% in seven of the last eight months.

On the downside, consumer confidence continues to drop, although at a relative slow rate. The turbulence in the stock market and increased interest rates have taken only a small toll on consumers so far. Any negative feelings generated by these negative factors have been offset for the most part by the positives in the economy, particularly the strong labor market. In terms of the national economy, April’s decline in the national Index of Leading Economic Indicators may be a sign that the interest rate increases engineered by the Federal Reserve is finally slowing down the national economy. The impact that this will have on the economy of San Diego remains to be seen at this point.

April's gain puts the Index of Leading Economic Indicators for San Diego County at 150.7, up from March’s reading of 149.8. There were no revisions to any of the previously reported values for March. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

    Index  % Change 
1999 APR 141.9 +0.1%
  MAY 142.6  +0.5%
  JUN 143.3 +0.5%
  JUL 143.8 +0.3%
  AUG 144.1 +0.3%
  SEP 144.9 +0.5%
  OCT 145.4 +0.3%
  NOV 146.0 +0.4%
  DEC 146.6 +0.5%
2000 JAN 147.9 +0.8%
  FEB 148.8 +0.6%
  MAR 149.8 +0.7%
  APR 150.7 +0.6%

For more information on the University of San Diego's Index of Leading Economic Indicators, please contact:

Professor Alan Gin 
School of Business Administration 
University of San Diego 
5998 Alcalá Park 
San Diego, CA 92110 
TEL: (619) 260-4883 

FAX: (619) 501-2954 

E-mail: agin@home.com 

The Index of Leading Economic Indicators is published by USD’s Real Estate Institute (REI). For more information about the REI, please contact Mark Riedy at (619) 260-4872.