Leading Economic Indicators
Down Slightly in July
6, 2006 --The University of San Diego's Index of Leading Economic Indicators for
San Diego County fell 0.1 percent in July. Five
components were down during the month, with a large increase in initial claims
for unemployment insurance (a negative for the Index) leading the way.
The four other declining components (local stock prices, consumer
confidence, help wanted advertising, and the outlook for the national economy)
were down only slightly. These were
nearly offset by a sharp increase in building permits, the only positive
component in the Index.
||Index of Leading Economic
The index for San Diego County that
includes the components listed below (July)
Source: University of San Diego
|- 0.1 %
Residential units authorized by building
permits in San Diego County (July)
Source: Construction Industry Research
Initial claims for unemployment insurance
in San Diego County, inverted (July)
Source: Employment Development Department
San Diego Stock Exchange Index (July)
Source: San Diego Daily Transcript
An index of consumer confidence in San
Diego County (July)
Source: San Diego Union-Tribune
||Help Wanted Advertising
An index of print and online help wanted advertising in
San Diego (July)
Source: Monster Worldwide, San Diego Union-Tribune
Index of Leading Economic Indicators (July)
Source: The Conference Board
move was the fourth consecutive monthly decrease in the USD Index of Leading
Economic Indicators. The decline was
broad based, with five of the six components down during the month.
Interestingly, almost all of the components turned negative in April and
many have remained negative since. Given
the negative indications, the outlook is for a slowing in the local economy
towards the end of 2006, with the weakness extending at least through the
beginning of 2007. This weakness
will be manifested in the form of slower job growth (about 15,000 compared to the
current 18,000 - 19,000) and the unemployment rate edging up to 4.5 percent.
Residential units authorized by building permits posted a second straight
strong gain after declining for a full year.
Strength in multifamily units authorized is largely responsible for the
turnaround. . . The labor market variables were both down in July, indicating
weakness in terms of both job losses and hiring plans.
While still relatively low compared to historic levels,
initial claims for unemployment insurance are up more than 20%
from the low reached in November of 2005. Help
wanted advertising remains weak, with an increase in online advertising only
partially offsetting declines in print advertising.
The consequence is that the local unemployment rate has increased to 4.3
percent in July after being under 4 percent for much of the spring. . . After
finishing 2005 and beginning 2006 with a rebound, consumer confidence has
slipped again. The war in Iraq, high
gas prices, an uncertain housing market, and political turmoil locally,
nationally, and internationally are some of the reasons for consumer pessimism.
Consumer spending could by adversely affected, which is significant
because consumer spending is typically two-thirds of economic activity. . .
With the Nasdaq Composite Index in the red for the year, local stock prices
remain under pressure. They have
mirrored the overall Index and have fallen for four months in a row. . . The national
Index of Leading Economic Indicators indicates potential problems for the
national economy. Although down only
slightly in July, the national Index has decreased in three of the last four
months and four of the last six. A
weak national economy would hurt San Diego's
tourism industry and those firms who sell products nationally.
Index of Leading Economic Indicators for San Diego County stood at 142.4 in
July, down slightly from June's
reading. Please visit the Index of
Leading Economic Indicators Website at the address below to get the values for
any revised components. The values
for the Index of Leading Economic Indicators for San Diego County for the last
year are given below:
For more information on the University of San Diego's Index of Leading
Economic Indicators, please contact: