Leading Economic Indicators Unchanged in October

Note: Due to the holidays, the release date for next month's report is uncertain.

November 30, 2010 -- The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County was unchanged in October, despite the fact that five of the six components in the Index were positive during the month. The outlook for the national economy was up sharply, initial claims for unemployment insurance and local stock prices were moderately positive, and consumer confidence and help wanted advertising also increased, but just barely. These gains were offset by a huge drop in building permits to leave the USD Index unchanged for the third straight month.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (October
Source: USD
 Burnham-Moores Center for Real Estate
+ 0.0 % 
Building Permits 
Residential units authorized by building permits in San Diego County (October)
Source: Construction Industry Research Board
- 2.21% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (October

Source: Employment Development Department 
+ 0.48% 
  Stock Prices 
San Diego Stock Exchange Index (October) 
Source: San Diego Daily Transcript 
+ 0.65%
Consumer Confidence 
An index of consumer confidence in San Diego County (October) 
Source: San Diego Union-Tribune
+ 0.04% 
  Help Wanted Advertising 
An index of online help wanted advertising in San Diego (October) 
Source: Monster Worldwide
+ 0.09% 
National Economy 
Index of Leading Economic Indicators (October) 
Source: The Conference Board 
+ 1.05% 

There was some initial concern when last month’s report showed the first drop in the USD Index in 18 months. But that decline was revised upward to unchanged (see below), so no turning point to the downside has been signaled. The outlook remains for slow but positive growth for the local economy at least through the first half of 2011. One area that has been improving has been the labor market. While the news is still bad, with the unemployment rate above 10 percent now for 17 straight months, the situation is relatively better than during the depths of the downturn. In October, non-farm wage and salary employment was down 1,100 from October 2009, which was the best year-over-year comparison since April 2008. With hints of a stronger Christmas buying season, it is likely that the year-over-year comparison will turn positive in November and December for the first time since the Great Recession began.

Highlights: Residential units authorized by building permits fell to their lowest level of 2010 in October. While single-family permits are still holding up, multi-family units are down slightly through October compared to the same period in 2009 . . . The labor market components were both positive for the first time since March of this year. The pace of job loss slowed, with initial claims for unemployment insurance hitting the lowest level of the year, both in absolute and in seasonally adjusted terms. The hiring side of the market was virtually unchanged, although slightly positive, with help wanted advertising increasing for the 12th consecutive month. The net result was that the local unemployment rate dropped to 10.2 percent in October, which is down from the 10.6 percent rate of September. . . Local consumer confidence remains volatile on a month-to-month basis, with the actual value of the index down for October compared to September. But when the volatility is smoothed out using a moving average, the trend is still slightly positive. . . After slumping in the late spring and early summer, local stock prices advanced for a third straight month, following the rally in the broader financial markets. . . The national Index of Leading Economic Indicators turned in a second strong advance and has now been up four months in a row. The "second" estimate for Gross Domestic Product (GDP) for the third quarter showed growth at a 2.5 percent annualized rate, up from the 1.7 growth rate of the second quarter and the fifth consecutive quarter of positive GDP growth.

October’s unchanged reading puts the USD Index of Leading Economic Indicators for San Diego County at 110.0, the same as September’s revised level. A big upward revision in the national Index of Leading Economic Indicators caused the change in September to be revised upward to unchanged from the previously reported drop of 0.1 percent. Please visit the Website address given below to see the revised changes for the individual components. The values for the USD Index for the last year are given below:


% Change
2009 OCT 106.3 +0.5%
  NOV 106.5 +0.1%
  DEC 107.2 +0.7%
2010 JAN 107.7 +0.5%
  FEB 107.9 +0.2%
  MAR 109.0 +1.0%
  APR 109.2 +0.1%
  MAY 109.5 +0.3%
  JUN 109.7 +0.2%
  JUL 110.0 +0.3%
  AUG 110.0 +0.0%
  SEP 110.0 +0.0%
  OCT 110.0 +0.0%

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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: (858) 603-3873 

FAX: (858) 484-5304 

E-mail: agin@san.rr.com