Leading Indicators Up Slightly In July

September 9, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.1 percent in July. A moderate rise in the outlook for the national economy was the largest contributor to the gain. There were smaller gains in building permits, consumer confidence, and help wanted advertising. Two components, initial claims for unemployment insurance and local stock prices, were slightly negative during the month.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (July)  Source: University of San Diego	+ 0.1 %
	Building Permits  Residential units authorized by building permits in San Diego County (July)  Source: Construction Industry Research Board	+0.37%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (July)  Source: Employment Development Department	-0.18%
	Stock Prices  San Diego Stock Exchange Index (July)  Source: San Diego Daily Transcript	-0.37%
	Consumer Confidence  An index of consumer confidence in San Diego County (July)  Source: San Diego Union-Tribune	+0.29%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (July)  Source: Greater San Diego Chamber of Commerce	+ 0.14%
	National Economy  Index of Leading Economic Indicators (July)  Source: The Conference Board	+ 0.62%

With July’s gain, the Index has now increased for 40 months in a row. July’s rise was also the fifth straight month where the Index increased by only 0.1%. The result is a mixed picture as far as the outlook for the San Diego economy is concerned. Because the Index is still rising, the forecast for the local economy remains positive. But the small magnitude of the change and the weakness of some of the individual components raise concern about the strength of any future growth in the local economy. In fact, the gains in some of the components are so small that they could turn negative at any point, which could drag the overall Index down. For now, then, the forecast is optimistic but very cautious through the first half of 1999.

Two components are of particular interest in July. First, local stock prices dropped during the month. This indicates that the financial markets are wary about the prospects for San Diego-based companies. Results are likely to be even worse in next month’s report, when the big stock market declines of August will be factored in. On the positive side, the national Index of Leading Economic Indicators increased significantly during the month. The national Index had declined in the previous two months, and a third consecutive decrease might have signaled a turning point in the national economy, with negative implications for San Diego. But the national Index rebounded in July, despite the turmoil in the global economy. Whether it will remain positive in the wake of further gloom internationally and in the financial markets remains to be seen.

July's increase puts the Index of Leading Economic Indicators for San Diego County at 143.4, up from June’s reading of 143.2. There was no revision of the previously reported change of +0.1% 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	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%
	FEB	142.6	+0.4%
	MAR	142.8	+0.1%
	APR	142.9	+0.1%
	MAY	143.1	+0.1%
	JUN	143.2	+0.1%
	JUL	143.4	+0.1%

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: