Leading Economic Indicators
Up in May
Note: The tentative release date for next month's
report is July 26.
June 29, 2011 --
The USD Burnham-Moores Center for Real Estate's
Index of Leading Economic Indicators for San Diego County rose 0.7 percent in
May. Leading the way to the upside were
sharp increases in help wanted advertising and the outlook for the national
economy. Building permits, initial claims
for unemployment insurance, and local stock prices were also positive, although
to a lesser extent. These gains
outweighed a small decline in local consumer confidence to push the USD Index to
its seventh straight gain, and the 26th month in a row without a
The outlook continues to be positive for the local economy,
and growth is expected at least through the end of 2011.
The USD Index has been signaling a rebound for the last two years, yet
the local economy remains in difficult straits.
What is the explanation for that?
The recession in the local economy probably ended in late 2009, meaning
that the local economy stopped falling at that point.
It has grown since then, but the growth has been very slow.
Given how far down the economy was when it hit bottom, a slow improvement
from that bottom would leave the economy in a bad situation.
For example, the unemployment rate has improved by nearly a percent and a
half from its peak, but that still leaves the rate in the 9 percent range, which
would be terrible under any other circumstance.
Residential units authorized by building permits
rose for the fifth consecutive month, although the gain was not nearly as large
as the strong moves seen in the first four months of 2011.
Multi-family units authorized had previously fueled the surge in permits,
but only 10 multi-family units were authorized in all of May. . . Both sides of
the labor market remain firm.
Initial claims for unemployment insurance
continue to fall, which is positive for the USD Index and a sign of reduced job
loss in the local economy. The
hiring side of the market is also strong, with help wanted advertising up
for five months in a row, including significant gains in the last four months.
The net result was that the local unemployment rate fell to 9.6 percent
in May, down from 9.8 percent in April.
This was the second month in a row the local unemployment rate was below
10 percent after 22 consecutive months above that level. . . High gas prices and
worries about the economy finally impacted local consumer confidence,
which fell for the first time after rising for a full year. . . Local stock
prices increased in May, even though the broader market averages were down.
That’s because the value for local stock prices is determined by taking
the average daily close for the entire month, and strength in the first part of
the month outweighed the negative trend at the end of the month. . . After
falling for the first time in 10 months in April, the national Index of
Leading Economic Indicators turned positive again and registered the largest
increase of any component. Similar
to the local situation, the outlook for the national economy is for positive but
slow growth. The third estimate of
GDP growth for the first quarter of 2011 showed a 1.9 percent annualized growth
rate for the national economy, up slightly from last month’s second estimate of
increase puts the USD Index of Leading Economic Indicators for San Diego County
at 117.2, up from April's
revised reading of 116.4. Revised
data for building permits, consumer confidence, and the national Index of
Leading Economic Indicators led to an upward revision in the value of the USD
Index from the previously reported value of 116.3.
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: