Leading Economic Indicators
Down in June
Note: The tentative release date for next month's
report is August 25.
July 26, 2011 --
The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic
Indicators for San Diego County
fell 0.2 percent in June. The drop was
led by a sharp decrease in consumer confidence and featured moderate declines in
building permits, initial claims for unemployment insurance, and local stock
prices. These overweighed a big increase
in help wanted advertising and a more modest gain in the outlook for the
national economy to push the USD Index to its first loss in 27 months.
Although a downturn in the local economy is not imminent, the
first drop in the USD Index in more than two years is a cause for concern.
Economists usually look for three consecutive changes in one direction in
a leading index as a signal of a turning point in an economy, so it remains to
be seen whether this is a beginning of a trend or simply a one month aberration.
The data on the local economy, particularly the labor market, is mixed.
Although the unemployment rate increased in June (see below), wage and
salary job growth was solid, especially on a year-over-year basis.
Average employment for the first six months of 2011 is up almost 17,000
jobs compared to the same period in 2010.
The sectors showing the strongest gains are administrative, support, and
waste services (+4,650 jobs), leisure and hospitality (+4,500), health care
(+4,400), and professional, scientific, and technical services (+4,000).
Only construction (-2,000) was down significantly.
After starting the year strongly,
residential units authorized by building permits
slowed dramatically in the last couple of months.
Revised data for May showed that zero multi-family residential units were
authorized in the month, the first time ever that no units were authorized in a
month. For the first half of the
year, total residential units authorized were up more than 38 percent when
compared to the first half of 2010.
All of that gain came from multi-family units, which were up 115 percent.
Single-family units authorized were actually down about 4 percent in the
same period. . . The labor market variables were mixed in June.
Job losses surged, leading initial claims
for unemployment insurance to turn negative after
five straight positive months. On
the positive side, hiring remains solid as help wanted advertising
advance for the sixth consecutive month.
The net result is that the local unemployment rate rose sharply to 10.4
percent in June from 9.6 percent in May, breaking a modest two month string
where the unemployment rate was below 10 percent. . . Consumer confidence
continues to fall as gas prices remain relatively high and the labor market
shows no sign of improving quickly.
This is significant because consumer activity represents two-thirds or more of
economic activity. . . Local stock prices fell in June along with the
rest of the financial markets as investors turned negative on the outlook for
the economy. . . Despite some weakness in a number of economic variables, the
national Index of Leading Economic Indicators was up again in June.
Although growth in GDP for the first quarter was slow, it was still
positive. The same can be said for
national employment growth in May and June, which was positive but very weak.
June’s decrease puts the USD Index of Leading
Economic Indicators for San Diego County
at 117.0, down from May’s reading of 117.2.
Revised data for building permits and the national Index of Leading
Economic Indicators led to the change for April being revised upward from +0.9
percent to +1.0 percent, but there were no other changes.
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:
For more information on the University of San Diego's Index of Leading
Economic Indicators, please contact: