Leading Indicators Up in July

September 16, 1999--The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 0.4 percent in July. The increase was fueled by a sharp rise in local stock prices during the month. There were also moderate gains for initial claims for unemployment insurance and the outlook for the national economy. Three components--consumer confidence, building permits, and help wanted advertising--were negative, although the latter two were only slightly so.

	Index of Leading Economic Indicators  The index for San Diego County that includes the components listed below (July)  Source: University of San Diego	+ 0.4 %
	Building Permits  Residential units authorized by building permits in San Diego County (July)  Source: Construction Industry Research Board	- 0.13%
	Unemployment Insurance  Initial claims for unemployment insurance in San Diego County, inverted (July)  Source: Employment Development Department	+ 0.61%
	Stock Prices  San Diego Stock Exchange Index (July)  Source: San Diego Daily Transcript	+ 1.71%
	Consumer Confidence  An index of consumer confidence in San Diego County (July)  Source: San Diego Union-Tribune	- 0.44%
	Help Wanted Advertising  An index of help wanted advertising in the San Diego Union-Tribune (July)  Source: Greater San Diego Chamber of Commerce	- 0.06%
	National Economy  Index of Leading Economic Indicators (July)  Source: The Conference Board	+ 0.46%

July’s increase was the fifth in a row for the Index, and the third consecutive solid gain. The Index still has not declined in 1999. There was some deterioration in the breadth of the advance when compared to recent months, as only three of the six components were up during the month. Overall though, the outlook remains moderately positive for the local economy through the first part of the year 2000.

July saw another strong increase in local stock prices. This is an indication that investors feel positive about the prospects of San Diego-based companies. Leading the way to the upside has been the price of Qualcomm shares, which has increased over 500% since the beginning of the year. This is the best performance of any company in the Standard and Poor’s 500 Index this year. More than any other company, Qualcomm best represents the new San Diego economy based on telecommunications and high technology. The stunning rise in its stock price indicates that investors have high expectations about the company’s performance in the future, which bodes well for the local economy.

Not so confident in July were consumers, as consumer confidence dropped for the eleventh consecutive month. Also down in July was help wanted advertising, which had rebounded in the previous month after nine months of decline. The third down component in the month was building permits. As has been discussed in this space before, the Index measures the month-to-month changes in components. While building permits for 1999 as a whole are running nearly 50% higher than for the comparable time period in 1998, they are at such high levels that positive month-to-month comparisons may be difficult to achieve.

July's gain puts the Index of Leading Economic Indicators for San Diego County at 143.8, up from June’s reading of 143.3. Although there was a revision in building permits for June, there was no revision of the previously reported change of +0.5% for the month. The fluctuations of the Index of Leading Economic Indicators for San Diego County for the last year are given below:

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The Index of Leading Economic Indicators is published by USD’s Real Estate Institute (REI). For more information about the REI, please contact Mark Riedy at (619) 260-4872.