Leading Indicators Up in March

May 13, 1999--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.2 percent in March. There were solid gains in building permits, initial claims for unemployment insurance, and local stock prices. The outlook for the national economic was also positive. On the negative side, help wanted advertising continued to trend lower, as did consumer confidence.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (March) 
Source: University of San Diego 
+ 0.2 % 
Building Permits 
Residential units authorized by building permits in San Diego County (March) 
Source: Construction Industry Research Board 
+ 0.61% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (March) 
Source: Employment Development Department 
+ 0.71% 
Stock Prices 
San Diego Stock Exchange Index (March) 
Source: San Diego Daily Transcript 
+ 0.69%
Consumer Confidence 
An index of consumer confidence in San Diego County (March) 
Source: San Diego Union-Tribune
- 0.17% 
Help Wanted Advertising 
An index of help wanted advertising in the San Diego Union-Tribune (March) 
Source: Greater San Diego Chamber of Commerce 
- 0.92% 
National Economy 
Index of Leading Economic Indicators (March) 
Source: The Conference Board 
+ 0.15% 

With March’s gain, the Index seems to have stabilized. After falling for the last four months of 1998, the Index did not drop in any of the months in the first quarter of 1999. While not spectacular, the were a number of positive aspects about March’s increase. The gain was broad-based, with four of the six components up in the month. And instead of a single component being responsible for most of the rise, a number of components contributed significantly to the move in March. For now, the outlook for the latter part of 1999 continues to be for continued growth in the local economy, although at a slower pace.

The labor market variables continue to be in conflict. Help wanted advertising fell for the seventh consecutive month, while initial claims for unemployment insurance continue to decrease, which is a positive development for the Index. Thus, the outlook for the labor market remains mixed.

Building permits turned in a spectacular performance during the first quarter of 1999. Although not reflected when looking at changes on a month-to-month basis, a year-to-year comparison shows that residential units authorized by building permits were up nearly 70% in the first quarter of 1999 compared to the first quarter of 1998, going from 2,594 to 4,397. Much of this gain was in the important muli-family housing sector, with units authorized more than tripling from 666 in 1998 to 2,219 in 1999. The benefits of this are twofold: (1) The economy of San Diego will get a boost due to increased construction and sales activity, and (2) it will help ease the severe housing shortage that exists locally, especially as far as multi-family housing is concerned.

March's gain puts the Index of Leading Economic Indicators for San Diego County at 141.7, up from February’s revised reading of 141.5. Revisions in building permits and the outlook for the national economy affected the Index values from October 1998 through February 1999, although the percentage changes were unaffected. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

    Index  Change     
1998 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 143.2  -0.4%  
  OCT 142.5 -0.5%   
  NOV  141.8 -0.5%   
  DEC 141.1 -0.5%   
1999 JAN 141.5 +0.3%   
  FEB 141.5 +0.0%   
  MAR 141.7 +0.2%   

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

Professor Alan Gin 
School of Business Administration 
University of San Diego 
5998 Alcalá Park 
San Diego, CA 92110 
TEL: (619) 260-4883 

FAX: (619) 260-4891 

E-mail: AGin@prodigy.net 

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.