Leading Indicators Down in June

July 30, 2003 --The University of San Diego's Index of Leading Economic Indicators for San Diego County fell 0.2 percent in June. A sharp drop in building permits along with smaller decreases in consumer confidence and help wanted advertising were responsible for June’s decline. Initial claims for unemployment insurance, local stock prices, and the outlook for the national economy were positive in varying degrees, but they were not able to overcome the negative components.

The USD Index of Leading Economic Indicators is published under the auspices of the School of Business Administration's Real Estate Institute. For more information about the Institute, please visit its Website at http://realestate.sandiego.edu

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (June) 
Source: University of San Diego 
- 0.2 % 
Building Permits 
Residential units authorized by building permits in San Diego County (June) 
Source: Construction Industry Research Board 
- 1.34% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (June) 
Source: Employment Development Department 
+ 0.32% 
Stock Prices 
San Diego Stock Exchange Index (June) 
Source: San Diego Daily Transcript 
+ 0.99%
Consumer Confidence 
An index of consumer confidence in San Diego County (June) 
Source: San Diego Union-Tribune
- 0.41% 
Help Wanted Advertising 
An index of help wanted advertising in the San Diego Union-Tribune (June) 
Source: San Diego Union-Tribune
- 0.64% 
National Economy 
Index of Leading Economic Indicators (June) 
Source: The Conference Board 
+ 0.17% 

Last month’s report urged caution as the USD Index of Leading Economic Indicators advanced even though only two of the six components were up during the month. That gain was fueled by a large gain in the national Index of Leading Economic Indicators. The need for caution was borne out with June’s decrease in the Index. The components were evenly divided, with three components up and three components down, but a much smaller increase in the national Index led to the fourteenth decrease in the local Index in fifteen months. The outlook for the local economy remains weak at this point. Of particular concern is the deterioration in the job market, as reflected in the loss of more than 11,000 nonfarm wage and salary jobs in June compared to the year before. It was the third straight month where jobs have declined compared to the year before. While an increase in jobs is expected for the year as a whole, a lack of job growth in the national economy and turmoil in the state of California over the state budget deficit and the recall of Governor Gray Davis may put that forecast in jeopardy.

Highlights: Although June is usually the strongest month of the year, residential units authorized by building permits were down compared to the previous month. Still, they were up more than 18% in the first half of 2003 compared to the same period the year before. Most of the gain came from multifamily units, which are up almost 47% from the year before. . . The labor market variables turned mixed in June. While help wanted advertising dropped for the tenth consecutive month, initial claims for unemployment insurance decreased a bit, which is a positive for the Index. The labor market remains weak, with the unemployment rate rising to 4.5% in June from 4.2% in May. . . Local stock prices finished the second quarter on a strong note, mirroring the performance of other stocks. The Standard and Poors’ 500 Index finished the quarter up nearly 15%, while the NASDAQ Composite was up over 20%. . . The sharp fall in consumer confidence earlier in the year continue to have a negative influence. The trend in that component, as measured by the moving average, continues to be negative, even though the raw data has been moving up in recent months. . . The national Index of Leading Economic Indicators was up for the third month in a row, although the gain was not as strong as May’s sharp increase.

June’s decrease puts the Index of Leading Economic Indicators for San Diego County at 130.8, down from May’s revised reading of 131.0. An upward revision in the national Index of Leading Economic Indicators led to the change, although there was no change in the previously reported change of +0.1% for the month. The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below:

Index   % Change
 2002 JUN 137.5 -0.5%
  JUL 136.5 -0.7%
  AUG 135.6 -0.7%
SEP 134.4 -0.9%
OCT 133.2 -0.9%
NOV 132.8 -0.3%
DEC 132.2 -0.5%
2003 JAN 131.9 -0.2%
FEB 131.4 -0.3%
MAR 131.2 -0.1%
APR 130.8 -0.3%
MAY 131.0 +0.1% 
JUN 130.8 -0.2%

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: (858) 484-5304 

E-mail: agin@san.rr.com