Leading Indicators Up in January

March 18, 1999--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.3 percent in January. The rise was led by a sharp increase in building permits. There were also solid gains in initial claims for unemployment insurance and the outlook for the national economy. These positive moves outweighed a big drop in help wanted advertising and a smaller fall in consumer confidence. Local stock prices were virtually unchanged, with a slight negative bias.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (January)  Source: University of San Diego	+ 0.3 %
	Building Permits  Residential units authorized by building permits in San Diego County (January)  Source: Construction Industry Research Board	+ 1.54%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (January)  Source: Employment Development Department	+ 0.82%
	Stock Prices  San Diego Stock Exchange Index (January)  Source: San Diego Daily Transcript	- 0.02%
	Consumer Confidence  An index of consumer confidence in San Diego County (January)  Source: San Diego Union-Tribune	- 0.46%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (January)  Source: Greater San Diego Chamber of Commerce	- 1.07%
	National Economy  Index of Leading Economic Indicators (January)  Source: The Conference Board	+ 0.77%

January’s increase broke a string of four consecutive monthly declines for the Index. The breadth of the advance was reasonably good, with three components up solidly and a fourth virtually unchanged. The declines in the four previous months forecast a slowdown in the local economy later in 1999, but January’s gain is encouraging. The Index should be monitored carefully in the coming months to determine whether the upward momentum can be sustained.

Leading the upward move was a huge jump in building permits. This was particularly significant since January is typically a slow month for building permits. Residential units authorized in the month totaled 1,867, which was the largest number for a January since 1990. The total included more than 1,000 apartment units authorized in the city of San Diego, with over half of those in a single project.

Also giving a boost to the Index was a decline in initial claims in unemployment insurance. After surging in December, initial claims dropped in January, which is usually the worst month of the year for that component. When seasonal adjustment is taken into account, the small absolute drop in January translated into a healthy positive move for the Index.

Seasonal adjustment worked against the Index in the case of help wanted advertising. The first month of each of the four quarters of the year (January, April, July, October) is typically the best month of the quarter for help wanted advertising. After the best December of the 1990s, January’s help wanted numbers were down almost 25% from the previous year. So the situation in the labor market is mixed at this point.

January's increase puts the Index of Leading Economic Indicators for San Diego County at 141.4, down from November’s revised reading of 141.0. Because of revisions in building permits for September through December, the levels of the Index have been revised to those indicated below, and the previously reported change of -0.4% for October was modified to -0.5%. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

		Index	Change
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	+0.7%
	SEP	143.2	-0.4%
	OCT	142.4	-0.5%
	NOV	141.7	-0.5%
	DEC	141.0	-0.5%
1999	JAN	141.4	+0.3%

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

The Index of Leading Economic Indicators is published by USD’s Real Estate Institute (REI). For more information about the REI, please contact Mark Riedy at (619) 260-4872.