Leading Indicators Up Slightly In June

August 6, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.1 percent in June. The gain was largely due to an increase in consumer confidence, with only minor support from initial claims for unemployment insurance and help wanted advertising. On the downside, the outlook for the national economy was negative, while building permits and local stock prices were virtually unchanged.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (June)  Source: University of San Diego	+ 0.1 %
	Building Permits  Residential units authorized by building permits in San Diego County (June)  Source: Construction Industry Research Board	+0.01%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (June)  Source: Employment Development Department	+0.08%
	Stock Prices  San Diego Stock Exchange Index (June)  Source: San Diego Daily Transcript	+0.01%
	Consumer Confidence  An index of consumer confidence in San Diego County (June)  Source: San Diego Union-Tribune	+0.69%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (June)  Source: Greater San Diego Chamber of Commerce	+ 0.14%
	National Economy  Index of Leading Economic Indicators (June)  Source: The Conference Board	- 0.31%

June’s increase was the 39^th consecutive monthly increase in the Index. Last month’s report indicated that the local Index of Leading Economic Indicators was revised to unchanged in April, breaking the string of consecutive monthly increases. A subsequent upward revision of the national Index of Leading Economic Indicators for that month resulted in the local index being revised back into the positive column. Thus, the string of monthly increases continues. However, the performance of the Index has not been robust in recent months, and June’s results were particularly weak. Only one component, consumer confidence, increased by a significant amount. The Index was adversely affected by weakness in the outlook for the national economy in June. The national Index of Leading Economic Indicators has now declined for two months in a row, the first time it has done so since 1995. Economists usually consider three consecutive changes in a leading index as a sign of a possible change in direction for an economy. As was discussed in last month’s report, a downturn in the national economy may ultimately put downward pressure on the local economy.

Despite the weakness of the Index in June, there were still some positive signs. The labor market variables, initial claims for unemployment insurance and help wanted advertising, continue to inch up slowly. Residential units authorized by building permits were virtually unchanged for the month, which is an improvement over the negative results experienced in recent months. And the Index overall continues to increase. Until the data changes significantly, the outlook for the economy of San Diego remains positive. We may be moving into a period where there is a divergence between the performance of the local economy and the national one.

June's increase puts the Index of Leading Economic Indicators for San Diego County at 143.2, up from May’s reading of 143.1. The previously reported change of +0.2% for the month was revised downward to +0.1%. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

		Index	Change
1997	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%
	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%

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