Leading Indicators Up Slightly In March

May 11, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.1 percent in March. As was the case in the previous three months, a positive performance by initial claims for unemployment insurance sparked the gain. There were smaller increases in local stock prices, consumer confidence, help wanted advertising, and the outlook for the national economy. All these combined to offset a significant decrease in building permits to yield the 36th consecutive monthly increase in the Index.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (April) Source: University of San Diego	+ 0.1 %
	Building Permits  Residential units authorized by building permits in San Diego County (April)  Source: Construction Industry Research Board	-1.14%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (April)  Source: Employment Development Department	+0.92%
	Stock Prices  San Diego Stock Exchange Index (April)  Source: San Diego Daily Transcript	+0.10%
	Consumer Confidence  An index of consumer confidence in San Diego County (April)  Source: San Diego Union-Tribune	+0.21%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (April)  Source: Greater San Diego Chamber of Commerce	+ 0.45%
	National Economy  Index of Leading Economic Indicators (April)  Source: The Conference Board	+ 0.31%

March's gain in the Index was the smallest since January 1996. The rate of increase for the positive components has slowed, and the Index is being hurt by a poor performance in building permits. The drop in building permits seems to contradict reports of booming construction that has resulted in a shortage of construction workers. The answer to this paradox lies in the manner in which changes in the different components are calculated. Residential units authorized by building permits are up almost 40% in the first quarter of 1998 compared to the first quarter of 1997. However, changes in Index components are calculated on a month-to-month basis, not on a year-to-year basis. Thus, while building permits for 1998 are up when compared to the first three months of 1997, they are down when compared to the torrid pace set at the end of the year.

Other than the negative results in building permits, the outlook for the local economy remains positive. All the other components of the Index are positive. The labor market looks in good shape, with initial claims for unemployment continuing to decline and help wanted advertising continuing to increase. March's less than spectacular showing puts the uninterrupted three-year advance of the Index in jeopardy, but the trend for now is still positive. The next few months should be interesting to watch.

March's increase puts the Index of Leading Economic Indicators for San Diego County at 142.8, up from February's reading of 142.6. Although there were revisions in building permits, there was no revision to the previously reported change of +0.4 for February. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

		Index	Change
1997	MAR	133.8	+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%
	FEB	142.6	+0.4%
	MAR	142.8	+0.1%

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