Leading Indicators Up In February

April 21, 1998--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.4 percent in February. The move was led by a strong performance by initial claims for unemployment insurance. Also lending support were solid gains by consumer confidence, help wanted advertising, and the outlook for the national economy. Local stock prices were virtually unchanged, although with a slight positive bias, while building permits continued to pull back from their recent high levels.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (February) Source: University of San Diego	+ 0.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (February)  Source: Construction Industry Research Board	-0.57%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (February)  Source: Employment Development Department	+1.01%
	Stock Prices  San Diego Stock Exchange Index (February)  Source: San Diego Daily Transcript	+0.08%
	Consumer Confidence  An index of consumer confidence in San Diego County (February)  Source: San Diego Union-Tribune	+0.61%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (February)  Source: Greater San Diego Chamber of Commerce	+ 0.69%
	National Economy  Index of Leading Economic Indicators (February)  Source: The Conference Board	+ 0.63%

February’s increase was another solid performance by the USD Index. Good gains were registered by consumer confidence and the outlook for the national economy. The latter component turned in its best performance since June 1996. The strength in the labor market continues to be impressive. Initial claims for unemployment insurance continue to drop (a positive for the Index) and help wanted advertising continues to rise. The result is an unemployment rate that remains under 4%. In fact, there is some concern that the labor market is too strong. While a tight labor market is beneficial to workers, local employers are becoming concerned about a shortage of workers and higher labor costs.

While most of the indicators are positive, some should be monitored as signs of potential weakness in the local economy. One of these is local stock prices; where concerns about the impact of Asian economic crisis have adversely affected the stock prices of local stalwarts such as Qualcomm and Callaway Golf. Although prices overall have not fallen, their growth has slowed significantly. Another component to watch is building permits. While the number of residential units authorized is up compared to 1997, they have dropped when the comparison is made on a month-to-month basis. The frantic pace that was in evidence at the end of 1997 has slowed a little.

Overall, though, the outlook remains positive for the economy of San Diego. With February’s gain, the Index has now increased for 35 months in a row. It is likely then that the local economy will be strong throughout the rest of 1998.

February's increase puts the Index of Leading Economic Indicators for San Diego County at 142.6, up from January’s reading of 142.0. There was no revision to the previously reported change of +0.4 for January. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below: 

		Index	Change
1997	FEB	132.6	+0.9%
	MAR	133.7	+0.8%
	APR	134.2	+0.3%
	MAY	134.5	+0.3%
	JUN	135.1	+0.4%
	JUL	135.7	+0.4%
	AUG	136.4	+0.5%
	SEP	137.4	+0.7%
	OCT	139.0	+1.2%
	NOV	140.6	+0.7%
	DEC	141.4	+0.6%
1998	JAN	142.0	+0.4%
	FEB	142.6	+0.4%

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