Leading Indicators Down in May

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (May)  Source: University of San Diego	- 0.3 %
	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	- 3.12%
	Stock Prices  San Diego Stock Exchange Index (May)  Source: San Diego Daily Transcript	- 0.50%
	Consumer Confidence  An index of consumer confidence in San Diego County (May)  Source: San Diego Union-Tribune	+ 1.71%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (May)  Source: Greater San Diego Chamber of Commerce	+ 0.31%
	National Economy  Index of Leading Economic Indicators (May)  Source: The Conference Board	+ 0.65%

The decline in May was the second in a row for the USD Index of Leading Economic Indicators after it had risen in each of the four previous months. While the news is negative, it is not decidedly so, as is reflected in the even split between positive and negative components. The long-term outlook remains for an eventual return to strong growth in the local economy. However, the negative moves in the last two months is an indication that it may take longer than expected for the local economy to hit full stride, with a full recovery probably being pushed back until the end of the year and some rough spots in the months ahead.

Highlights: A moderate drop in May put the year-to-date figures for residential units authorized by building permits down nearly 6% from the same period in 2001. While multi-family units authorized are up in 2002, single-family units authorized are down more than 10% from the previous year. . . The labor market components continue to be mixed. Initial claims for unemployment insurance continued their negative trend, which indicates rising job losses in the region. This was offset slightly by a small gain in help wanted advertising, which registered its third consecutive monthly gain. Despite the surge in initial claims, the local labor market remains strong, with the county’s unemployment rate dropping to 3.7% in May from 3.9% in each of the two previous months. June will be a key test of the unemployment rate as the labor force expands with students seeking summer employment. . . Local stock prices fell slightly in May, breaking a modest two-month streak of gains. . . Relatively good news about the local economy, including a strong labor market and surging housing prices, fueled another strong gain in local consumer confidence. Consumer confidence has now increased for six months in a row and its smoothed trend is at its best level since January 2001. . . The national Index of Leading Economic Indicators registered its best result since January. News on the national economy remains mixed. While not in a recession, some data raise doubts about the strength of the economic rebound at the national level. However, preliminary estimates of first quarter Gross Domestic Product (GDP) growth did come in at a relatively robust 5.6% annual rate.

May's decrease puts the Index of Leading Economic Indicators for San Diego County at 138.2, down from April’s revised reading of 138.6. The previously reported change of -0.3% for April was revised to -0.2% due to revisions in building permits and the outlook for the national economy. The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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