School of Business Administration

Leading Indicators Up Sharply In November

January 27, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 1.1 percent in November. As was the case in the previous month, all six components of the Index rose in November. Strong positive moves were seen in local stock prices, initial claims for unemployment insurance, and building permits. Tourism and help wanted advertising also posted solid gains. The smallest increase was in the outlook for the national economy.

  Index of Leading Economic Indicators 

The index for San Diego County that includes the components listed below (November) 

Source: University of San Diego 

 

 + 1.1 % 
  Building Permits 

Residential units authorized by building permits in San Diego County (November) 

Source: Construction Industry Research Board 

 

 +1.43% 
  Unemployment Insurance 

Initial claims for unemployment insurance in San Diego County, inverted (November) 

Source: Employment Development Department 

 

 + 1.56% 
  Stock Prices 

San Diego Stock Exchange Index (November) 

Source: San Diego Daily Transcript 

 

 + 2.07% 
  Tourism 

An index of tourist activity in San Diego County (November) 

Source: San Diego Convention & Visitors Bureau 

 

 +0.99% 
  Help Wanted Advertising 

An index of help wanted advertising in theSan Diego Union-Tribune (November) 

Source: Greater San Diego Chamber of Commerce 

 

 + 0.65% 
  National Economy 

Index of Leading Economic Indicators (November) 

Source: The Conference Board 

 

 + 0.15% 
November's gain was the 32nd consecutive monthly increase in the Index. It was also the second straight month that the Index increased sharply. In contrast to October, when big moves in building permits and local stock prices accounted for much of the gain, the advance in November was more broad-based. In addition to continued momentum in those two components, initial claims in unemployment, tourism, and help wanted advertising all showed increased strength.

The greatest turnaround in recent months has been in the labor market variables, particularly initial claims for unemployment insurance. After edging up slightly in the late summer, initial claims have dropped dramatically. The number of claims filed in November were 12,905, which was the lowest monthly number since December 1989. While November is typically the lowest month of the year for initial claims, even on a seasonally-adjusted basis the result in November is the best since February 1990. The strength in the labor market is reflected in the very low unemployment rate of 3.6% for the month.

Given the broad-based strength in the Index, the outlook for the local economy remains bright. Enclosed is the University of San Diego's forecast for various sectors of the local economy for 1998. As can be seen, another solid gain of nearly 24,000 jobs is forecast for the county in 1998. Many of the jobs will be in high paying categories such as construction, manufacturing, finance, and engineering and management. Construction activity as measured by residential building permits will also do well, with another double digit percentage increase anticipated.

November's increase puts the Index of Leading Economic Indicators for San Diego County at 140.6, up from October's reading of 139.0. While the national Index of Leading Economic Indicators was revised downward, that did not affect the previously reported change of +1.2% for that month. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:
Index 
Change
1996  NOV  130.1 
+0.5% 
  
DEC  130.7 
+0.4% 
1997  JAN  131.5 
+0.6% 
FEB  132.6 
+0.9% 
MAR  133.7 
+0.8% 
APR  134.2 
+0.3% 
MAY  134.5 
+0.3% 
JUN  135.1 
+0.4% 
JUL   135.7 
+0.4% 
AUG  136.3 
+0.5% 
SEP  137.3 
+0.7% 
OCT  139.0 
+1.2% 
NOV  140.6 
+0.7% 
 

For more information on the University of San Diego's Index of Leading Economic Indicators or the activities of the University's Economic Research Group, 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) 260-4891 

E-mail: AGin@prodigy.net