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Leading Economic Indicators
Up in May
Note:
The
tentative release date for next month's report is July 28.
June 25, 2009 -- The University of San Diego's Index of Leading Economic
Indicators for San Diego County rose 0.3 percent in May. Another strong gain in local consumer confidence powered the USD Index to
its second consecutive gain after 24 straight down months. Also supporting the advance were sharp increases in local stock prices
and the outlook for the national economy, along with a smaller rise in building
permits. On the downside, the labor market variables continue to plunge, with both initial claims for unemployment
insurance and help wanted advertising sharply negative.
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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 % |
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Building Permits
Residential units authorized by building
permits in San Diego County (May)
Source: Construction Industry Research
Board |
+ 0.47% |
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Unemployment Insurance
Initial claims for unemployment insurance in San Diego
County, inverted, estimated (May)
Source: Employment Development Department |
- 3.12% |
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Stock Prices
San Diego Stock Exchange Index (May)
Source: San Diego Daily Transcript |
+ 1.17% |
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Consumer Confidence
An index of consumer confidence in San
Diego County (May)
Source: San Diego Union-Tribune |
+ 4.22% |
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Help Wanted Advertising
An index of online help wanted advertising in
San Diego (May)
Source: Monster Worldwide |
- 3.46% |
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National Economy
Index of Leading Economic Indicators (May)
Source: The Conference Board |
+2.39% |
At this point, cautious optimism needs to be exercised with
respect to the local economy. Another positive reading for June would be
the third in a row for the USD Index and would give the traditional signal of a
bottom for San Diego’s economy. That trough though would still be roughly
six to 12 months in the future. As was mentioned in last month’s report,
the rebound is likely to be relatively weak, given that the positive numbers in
the leading indicators have not been very strong. Finally, even after the
economy turns around, unemployment is still likely to be high as businesses tend
to be cautious in terms of hiring coming out of a slump. Still, the
outlook is better than just two months ago, and a flat local economy is better
than one that is declining.
Highlights:
While residential units authorized by building permits are down on a
year-over-year basis, the trend continues to be positive month-to-month,
particularly when compared to the record low levels registered in earlier in the
year. Any pickup in construction activity would be welcome as construction
employment has fallen by almost 30,000 since its peak in June 2006. . . Job
losses continue to be high as initial claims for unemployment insurance
topped the 30,000 mark for the fifth consecutive month. Hiring also
remains weak, with help wanted advertising now having fallen for 34
straight months. The net result was that the local unemployment rate edged
closer to the 10 percent mark with a reading of 9.4 percent in May and the
year-over-year job loss countywide topping 50,000. . . The USD Index uses a
moving average to smooth the month-to-month fluctuations that sometimes distort
the trend in the data. Based on this, local consumer confidence is
up sharply when compared to the low levels of recent months. This is
significant given that consumption typically represents two-thirds to 70 percent
of economic activity. . . The rally in local stock prices continued
in May as the financial markets signaled optimism in the prospects for San
Diego-based companies. . . After registering its biggest gain since June 2005 in
April, the national Index of Leading Economic Indicators did even better
in May. While the news on the national economy remains grim, things appear
to be “less bad” than in recent months. Examples include job losses and
the number of initial claims for unemployment insurance being lower than in
previous months. Also, the contraction in GDP for the first quarter was
revised to a 5.7 percent annualized rate, down from the 6.1 percent drop
originally estimated.
May’s decrease puts the USD Index of Leading Economic Indicators for San Diego
County at 101.2, up from April’s reading of 100.9. Revised data for
building permits in April and for the national Index of Leading Economic
Indicators for January through April affected only the previously reported level
of the USD Index for January. Please visit the Website address given below
to see the revised changes for the individual components. The values for
the USD Index for the last year are given below:
For more information on the University of San Diego's Index of Leading
Economic Indicators, please contact:
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