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	+ 0.21%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (May - estimated)  Source: Employment Development Department	- 0.82%
	Stock Prices  San Diego Stock Exchange Index (May)  Source: San Diego Daily Transcript	+ 0.24%
	Consumer Confidence  An index of consumer confidence in San Diego County (May)  Source: San Diego Union-Tribune	- 1.46%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (May)  Source: San Diego Union-Tribune	- 0.30%
	National Economy  Index of Leading Economic Indicators (May)  Source: The Conference Board	- 1.00%

May's decrease was the fifth in a row for the USD Index of Leading Economic Indicators, and was the largest monthly decline since October 2002 (after a revision of the April numbers).  Although the breadth of the decline continues to be negative, it actually improved a bit, with two components positive in May compared with only one gainer in the previous three months.  The bottom line is that the outlook for the local economy remains weak.  This sluggishness is expected materialize sometime in the second half of 2005 and carry over at least to the beginning of 2006. Job growth now looks to be in the 15,000 to 20,000 range for 2005, compared with the previous forecast of more than 20,000 jobs created.

Highlights: Volatility continues in terms of residential units authorized by building permits.  After being down in April compared to the previous month, a surge in multi-family units authorized in May pushed residential units authorized into positive territory once again. . . The labor market variables have both turned negative.  The trend in initial claims for unemployment insurance has now been negative for six consecutive months, which is an indication of an uptick in job losses locally.  And help wanted advertising has turned negative again, signaling weakness on the hiring side of the market.  Even so, the unemployment rate in San Diego dropped below the 4.0% mark to hit 3.8% in May. . . Consumer confidence remains weak.  One concern is that the drop in consumer confidence will adversely affect the housing market, as households may be more wary to take on large amounts of debt when they are concerned about their job and income circumstances. . . Local stock prices rallied along with the rest of the stock market in May.  Small capitalization stocks, which make up a significant portion of the local stock index and local economy, did particularly well, as evidenced by the 7.6% increase in the Nasdaq Composite Index for the month. . . The outlook for the national economy remains negative.  The Conference Board reports that only one component in its ten component national Index of Leading Economic Indicators rose in May.  A weak national economy has negative implications for local firms selling inputs and final products on a nationwide basis, as well as for the local tourism industry.

May's decrease puts the Index of Leading Economic Indicators for San Diego County at 141.2, down from April's revised reading of 141.9.  Revisions in building permits, initial claims for unemployment insurance, and the national Index of Leading Economic Indicators caused the previously reported change of -0.5% in April to be revised to -0.4%.  Please visit the Index of Leading Economic Indicators Website at the address below to get the values for the revised components.  The values for the Index of Leading Economic Indicators for San Diego County for the last year are given below: