Leading Indicators Up in May

August 12, 1999--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.5 percent in May. A sharp increase in local stock prices was supported by solid gains in building permits, initial claims for unemployment insurance, and the outlook for the national economy. Two components, consumer confidence and help wanted advertising, were negative, but only slightly so.

Index of Leading Economic Indicators 
The index for San Diego County that includes the components listed below (May) 
Source: University of San Diego 
+ 0.5 % 
Building Permits 
Residential units authorized by building permits in San Diego County (May) 
Source: Construction Industry Research Board 
+ 0.63% 
Unemployment Insurance 
Initial claims for unemployment insurance in San Diego County, inverted (May) 
Source: Employment Development Department 
+ 0.59% 
Stock Prices 
San Diego Stock Exchange Index (May) 
Source: San Diego Daily Transcript 
+ 1.74%
Consumer Confidence 
An index of consumer confidence in San Diego County (May) 
Source: San Diego Union-Tribune
- 0.21% 
Help Wanted Advertising 
An index of help wanted advertising in the San Diego Union-Tribune (May) 
Source: Greater San Diego Chamber of Commerce 
- 0.24% 
National Economy 
Index of Leading Economic Indicators (May) 
Source: The Conference Board 
+ 0.46% 

May’s gain was third consecutive monthly increase in the Index, and the largest increase since December 1997. The breadth of the increase continues to be positive, with four of the six components of the Index up in the month. Although the rapid growth in the local economy is still expected to slow in the near future, May’s solid gain in the Index signals that any slowdown may be a brief one.

One of the positive developments in the Index was the drop in initial claims for unemployment insurance. The total number of claims filed in the County during May was 12,486, which is the lowest monthly total of the 1990s. Even when seasonally adjusting that number to take into consideration that May is typically a low month for initial claims, the trend has been a steady drop in the number of claims filed. The implication is that the rate of job loss in San Diego has dropped considerably. The result is a strong labor market characterized by a low unemployment rate, despite the lack of growth in help wanted advertising.

May's gain puts the Index of Leading Economic Indicators for San Diego County at 142.6, up from April’s revised reading of 141.9. There was no revision of the previously reported change of +0.1% for April. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

    Index  Change     
1998 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%   
  APR 141.9 +0.1%   
  MAY 142.6 +0.5%   

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.