Leading Indicators Up in February

April 13, 2000 --The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.6 percent in February. As was the case in January, sharp advances by local stock prices and help wanted advertising fueled the surge. Two other components, initial claims for unemployment insurance and consumer confidence, were up moderately. On the downside in February were building permits and the outlook for the national economy, both of which were slightly negative.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (February)  Source: University of San Diego	+ 0.6 %
	Building Permits  Residential units authorized by building permits in San Diego County (February)  Source: Construction Industry Research Board	- 0.39%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (February)  Source: Employment Development Department	+ 0.59%
	Stock Prices  San Diego Stock Exchange Index (February)  Source: San Diego Daily Transcript	+ 1.65%
	Consumer Confidence  An index of consumer confidence in San Diego County (February)  Source: San Diego Union-Tribune	+ 0.65%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (February)  Source: Greater San Diego Chamber of Commerce	+ 1.69%
	National Economy  Index of Leading Economic Indicators (February)  Source: The Conference Board	- 0.49%

February’s gain was the twelfth consecutive monthly increase in the USD Index of Leading Economic Indicators. Although less strong than in recent months, breadth of the advance remains solid, with four of the six components increasing during the month. The outlook is for continued strong growth in the local economy well into the second half of 2000.

February saw few changes in the trends for the individual components. The labor market variables remain strong. In January, the increase in help wanted advertising was the largest since the mid-1980s, and February’s result was even better. When combined with the continuing drop in the number of initial claims for unemployment insurance being filed, the labor market remains in good shape. The strong labor market and soaring stock prices have pushed local consumer confidence higher for six months in a row, after that variable had fallen for an entire year.

On the negative side, the number of residential units authorized by building permits have now fallen for five consecutive months. The number of residential units authorized in the first two months of 2000 were 20% below the level during the same time period in 1999. While some special projects may have given an unusual boost to the 1999 numbers, higher interest rates may be taking a toll on that sector of the economy. The other down component was the outlook for the national economy. The national Index of Leading Economic Indicators suffered its worse decrease in four years in February. Although a one month drop does not establish a trend, the health of the national economy and how it affects San Diego needs to be monitored closely, particularly in light of the increase in interest rates and the recent surge in oil and gas prices.

February's gain puts the Index of Leading Economic Indicators for San Diego County at 148.8, up from January’s reading of 147.9. A revisions in the national Index of Leading Economic Indicators caused the previously reported change of +0.9% in January to be revised downward to +0.8%. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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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.