Leading Indicators Down in September

November 10, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.2 percent in September. A sharp gain in building permits powered the upward move, with moderate support from initial claims for unemployment insurance. These offset a big drop in local stock prices to lead the Index to its 41^st consecutive monthly gain. Consumer confidence, help wanted advertising, and the outlook for the national economy were virtually unchanged during the month, although the former two components were slightly positive.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (September)  Source: University of San Diego	- 0.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (September)  Source: Construction Industry Research Board	+0.60%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (September)  Source: Employment Development Department	+0.37%
	Stock Prices  San Diego Stock Exchange Index (September)  Source: San Diego Daily Transcript	-2.90%
	Consumer Confidence  An index of consumer confidence in San Diego County (September)  Source: San Diego Union-Tribune	-0.12%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (September)  Source: Greater San Diego Chamber of Commerce	- 0.48%
	National Economy  Index of Leading Economic Indicators (September)  Source: The Conference Board	+ 0.00%

September’s gain of 0.2%, combined with an upward revision in July’s gain from 0.1% to 0.2%, broke a string of months where the Index had increased only minimally. Those gains of only 0.1% raised some questions about the strength of the local economy’s growth in the near future. The gains in July and September now paint a little more optimistic picture about the outlook for the San Diego economy through the first half of 1999.

The key components in September were building permits and local stock prices, although they worked in opposite directions. Residential units authorized by building permits surged in September to 1,881, the best monthly total in 1998. Of those units, 1,084 were in multi-family projects, which is the highest number in that category since March 1991. That should help with the shortage of housing in the local economy, particularly as far as rentals are concerned. On the negative side, local stock prices tumbled in September, mirroring the declines in the national and international markets. A decline in the stock market is often seem as a leading indicator of a future recession. Whether that is the case for the local economy remains to be seen.

The labor market remains solid. While help wanted advertising barely budged in September, initial claims for unemployment insurance dropped significantly, which is a positive for the Index. Thus, while hiring plans seemed to have slowed somewhat, the rate of job loss has not risen and in fact slowed considerably in September.

September's increase puts the Index of Leading Economic Indicators for San Diego County at 143.8, up from July’s revised reading of 143.5. An upward revision in the national Index of Leading Economic Indicators caused the previously reported change of +0.1% for July to be revised to +0.2%. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

		Index	Change
1997	AUG	136.4	+0.5%
	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	143.5	+0.2%
	AUG	143.8	+0.2%
	SEP	137.4	+0.7%

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