San Diego Leading Economic Indicators, Oct 2014

Leading Economic Indicators Up in October

 Note:   Because of the holidays, the release date of next month’s report is uncertain.

December 3, 2014 — The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County rose 0.6 percent in October.  The pattern was the same as the previous month:  Strong gains in initial claims for unemployment insurance and the outlook for the national economy offset a sharp dropped in building permits.  Consumer confidence and help wanted advertising were up moderately while there was only a slight increase in local stock prices.

October’s gain was the fifth consecutive gain for the USD Index and signals continued solid growth in the local economy at least through the end of 2015.  Evidence of this should surface during the holiday spending season.  With the local unemployment rate 1.6 percent lower than last year and civilian employment up almost 55,000 since the same time last year, more money is available in the local economy.  The improving labor market should give consumers the confidence to spend that extra money.  Two other developments will also boost spending, although to a lesser extent:  The big drop in gas prices, almost 54 cents from last year, will mean more money to spend on things other than gasoline.  And the increase in the state minimum wage from $8 an hour to $9 will give workers at the low end a boost in income, almost all of which will be spent in the local economy.

Index of Leading Economic Indicators – The index for San Diego County that includes the components listed below (October) – Source:  USD Burnham-Moores Center for Real Estate +0.6%
Building Permits – Residential units authorized by building permits in San Diego County (October) – Source:  California Homebuilding Foundation -1.72%
Unemployment Insurance – Initial claims for unemployment insurance in San Diego County, inverted (October) – Source:  Employment Development Department +1.82%
Stock Prices – San Diego Stock Exchange Index (October) – Source:  San Diego Daily Transcript +0.08%
 Consumer Confidence – An index of consumer confidence in San Diego County , estimated (October) – Source: The Conference Board +0.93%
Help Wanted Advertising – An index of online help wanted advertising in San Diego (October) – Source: The Conference Board +0.87%
National Economy – Index of Leading Economic Indicators (October) – Source: The Conference Board +1.69%

School of Business Administration, 5998 Alcalá Park, San Diego, California 92110-2492  619/260-2256

Highlights:  Residential units authorized by building permits continue to be the one drag on the local economy.  With strong job growth and increasing incomes, the demand for housing remains strong.  The problem appears to be on the supply side, with the lack of skilled labor and developable land being the main culprits. . . Both labor market variables were positive in October and are getting stronger.  Other than an aberration in September of last year, initial claims for unemployment insurance are now at their lowest level since the first quarter of 2008. On the other side of the labor market, help wanted advertising registered its biggest one month gain since February 2013.  The net result was that the seasonally adjusted local unemployment rate fell to 5.8 percent in October, down from 5.9 percent in September and from 7.4 percent in October 2013 . . . Consumer confidence advanced for the ninth month in a row, which is important since consumer spending is typically two-thirds or more of economic activity.  In particular, when confidence rises, consumers are more likely to take on debt for big ticket purchases such as automobiles and housing. . .  As was mentioned in last month’s report, the USD Index use the average close for all trading days in a month to measure local stock prices. Although the market was very strong at the end of the month, the average for October overall barely edged upward. . . The national Index of Leading Economic Indicators continues to be strong and has now advanced or been unchanged for 10 straight months.  This is reflected in the second estimate for GDP growth for the third quarter, which came in at a robust 3.9 percent, which was up from the advance estimate of 3.5 percent released last month.

September’s increase puts the USD Index of Leading Economic Indicators for San Diego County at 129.9, up from September’s reading of 129.1.  Revisions in the national Index of Leading Economic Indicators reduced the previously reported change in August from +0.3 percent to +0.2 percent, but no other changes or Index levels were affected.  For revisions to the previously reported values for the Index and for the individual components, please visit the Website address given below.  The values for the USD Index for the last year are given below:

               Index      % Change

2013

OCT         127.0              -0.5

NOV        127.5              +0.4

DEC         127.5              +0.0

2014

JAN          127.6             +0.1

FEB          127.9             +0.2

MAR         128.6            +0.5

APR          127.9             -0.5

MAY         127.5             -0.3

JUN          127.7             +0.2

JUL          128.1             +0.3

AUG         128.4            +0.2

SEP          129.1             +0.6

OCT        129.9           +0.6

For more information on the University of San Diego’s Index of Leading Economic Indicators, please contact:

Professor Alan Gin                                TEL:  (858) 603-3873

School of Business Administration          FAX:  (858) 260-4891

University of San Diego                              E-mail: agin@sandiego.edu

5998 Alcalá Park                                          Website: http://www.sandiego.edu/~agin/usdlei

San Diego, CA 92110                                   Twitter:  @alanginusdsba

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s