Leading Indicators Up In January

March 27, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.4 percent in January. The gain was led by a strong positive move in initial claims in unemployment insurance. Help wanted advertising was also up solidly, and there were smaller increases in stock prices and consumer confidence. The outlook for the national economy was unchanged for the second consecutive month. The only negative component was building permits, which siowed after recent strong gains.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (January) Source: University of San Diego	+ 0.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (January)  Source: Construction Industry Research Board	-0.71%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (January)  Source: Employment Development Department	+1.74%
	Stock Prices  San Diego Stock Exchange Index (January)  Source: San Diego Daily Transcript	+0.24%
	Consumer Confidence  An index of consumer confidence in San Diego County (January)  Source: San Diego Union-Tribune	+0.40%
	Help Wanted Advertising  An index of help wanted advertising in theSan Diego Union-Tribune (January)  Source: Greater San Diego Chamber of Commerce	+ 0.68%
	National Economy  Index of Leading Economic Indicators (January)  Source: The Conference Board	+ 0.00%

January's gain was the 34t" consecutive monthly increase for the Index. It continues to forecast solid growth in the local economy, particularly in the labor market. Initial claims for unemployment insurance were down sharply in January, which is a positive for the Index and an indication that job losses have slowed dramatically. On the other side of the labor market, the good numbers for help wanted advertising indicate that hiring by local firms continues to be strong. The strength of the labor market components is reflected in the low unemployment rate in San Diego County, which remains under 4%.

January's reading includes a change in the components of the Index, the first since 1993. The Index now includes a measure of consumer confidence based on the San Diego Union-Tribune's Continuing Analysis of Shopping Habits (CASH) survey. This is another local equivalent of a component that is found in the national Index of Leading Economic Indicators. Shifts in consumer sentiment have proven to be a good indicator of future consumer activity, and a consumer confidence index is thus a good leading indicator of overall economic activity. Thanks go to Jeff Beliveau of the San Diego Union-Tribune for making this data available.

In addition, the tourism component has now been dropped from the Index of Leading Economic Indicators. The primary reason for this is that it allows a more timely release of the Index. Data for all of the components will now be available four to five weeks after the end of a month, instead of the current seven to eight weeks. Analysis has shown that replacing the tourism component with a consumer confidence component would not have altered the direction of the Index for the time period where the data are available. Many thanks go to the San Diego Convention and Visitors Bureau for supplying the tourism data for all these years.

January's increase puts the Index of Leading Economic Indicators for San Diego County at 142.0, up from December's reading of 141.4. There was no revision to the previously reported change of +0.6% for the month. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

 

		Index	Change
1997	JAN	131.5	+0.6%
	FEB	132.6	+0.9%
	MAR	133.7	+0.8%
	APR	134.2	+0.3%
	MAY	134.5	+0.3%
	JUN	135.1	+0.4%
	JUL	135.7	+0.4%
	AUG	136.4	+0.5%
	SEP	137.4	+0.7%
	OCT	139.0	+1.2%
	NOV	140.6	+0.7%
	DEC	141.4	+0.6%
1998	JAN	142.0	+0.4%

For more information on the University of San Diego's Index of Leading Economic Indicators or the activities of the University's Economic Research Group, please contact: