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Leading Economic Indicators Up in May

July 21, 2004 --The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.4 percent in May. A sharp drop in initial claims for unemployment insurance, a positive for the Index, was the biggest contributing factor to the increase. The outlook for the national economy was also up significantly and there were smaller increases in consumer confidence and help wanted advertising. On the negative side, local stock prices were down moderately while building permits were off slightly.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (May)  Source: University of San Diego	+ 0.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (May)  Source: Construction Industry Research Board	- 0.14%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (May)  Source: Employment Development Department	+ 2.21%
	Stock Prices  San Diego Stock Exchange Index (May)  Source: San Diego Daily Transcript	- 0.85%
	Consumer Confidence  An index of consumer confidence in San Diego County (May)  Source: San Diego Union-Tribune	+ 0.10%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (May)  Source: San Diego Union-Tribune	+ 0.26%
	National Economy  Index of Leading Economic Indicators (May)  Source: The Conference Board	+ 0.97%

With May's increase, the USD Index of Leading Economic Indicators has moved upward or been unchanged for 13 consecutive months. Although a couple of the components were negative in May, the breadth of the gains have been relatively strong in recent months. There were no negative changes in any of the components in five of the last seven months. The outlook for the local economy remains positive for the rest of 2004, barring an unforeseen negative external event.

Highlights: Residential units authorized by building permits are off of the pace registered in 2003, which was the best year since 1989. Where the number of single-family units authorized remains roughly the same through May, multi-family units authorized are down 18% compared to the same period in 2003. . . Both labor market variables continue to be positive. For the sixth consecutive month, initial claims for unemployment insurance dropped sharply. The 11,448 claims filed in may was the lowest monthly total since December 2000. While job losses have dropped significant, hiring has improved slowly but steadily.  Help wanted advertising has now increased for 10 straight months, although none of the gains have been spectacular. The positive news on both sides of the labor market pushed the local unemployment rate to 3.9% in May. . . Also up 10 months in a row is consumer confidence, although the rate of increase in that component is off considerably from the strong numbers seen at the end of 2003. . . Local stock prices fell along with other stocks as worries about higher interest rates battered the financial markets. . . The outlook for the national economy remains positive, with the national Index of Leading Economic Indicators having been positive or unchanged since March 2003.  Key variables at the national level such as the Gross Domestic Product and job growth have been strong in recent times, although there is some concern about the quality of the new jobs created.

May's increase puts the Index of Leading Economic Indicators for San Diego County at 141.7, up from April's reading of 141.1. The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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