For the first time since the Great Recession began, San Diego‘s economic outlook seems poised to show year-to-year improvement in November and December, thanks to growing signs of a strong holiday shopping season, according to an index of leading economic indicators released today by the University of San Diego‘s Burnham-Moores Center for Real Estate.
Five of the six indicators in the index were positive in October, although they were counterbalanced by a sharp drop in home building, according to USD economist Alan Gin, who compiles the index.
Because of the drop result in home building, the index showed zero growth in October – the third month in a row that it has been stagnant.
Even so, Gin said that improvements in the job market, consumer confidence and local stock shares means that “the outlook remains for slow but positive growth for the local economy at least through the first half of 2011.”
Here’s how each indicator performed in October:
- Unemployment. The pace of job loss slowed in October, with initial claims for unemployment insurance hitting their lowest level of the year, both in actual numbers and after adjusting for seasonal hiring trends. The drop in new filings helped push the local jobless rate from 10.6 percent in September to 10.2 percent in October. “While the news is still bad, with the unemployment rate above 10 percent now for 17 straight months, the situation is relatively better than during the depths of the downturn,” Gin said.
- Job openings. Help wanted advertising, based on a monthly index of on-line ads by Monster.com, increased for the 12th month in a row in October. Despite the upward trend, there were 1,100 few workers on local payrolls in October 2010 than in October 2009. But that’s the best year-to-year comparison since April 2008.
- Consumer confidence. Polling by The San Diego Union-Tribune shows that consumer confidence fell slightly in October. But because confidence surveys are often volatile, fluctuating wildly from one month to the next, Gin relies on a three-month running average of the polls. Based on that figure, consumer confidence showed a slight improvement between September and October.
- Stock prices. After slumping in the late spring and early summer, local stock prices advanced for a third straight month in October, keeping track with the rally in the broader financial markets.
- Home building. Residential building permits fell to their lowest level of the year in October, with 120 new single-family homes authorized throughout the county and 25 multifamily units, according to the U.S. Census Bureau. For the year as a whole, single-family permits are still holding up but multi-family units are down slightly through October compared to the same period in 2009, which was the worst year on record for home construction.
- National economy. The national Index of Leading Economic Indicators advanced strongly in October and has now been up four months in a row. The latest estimate for the gross domestic product in the third quarter showed growth at a 2.5 percent annualized rate, up from the 1.7 growth rate of the second quarter and the fifth consecutive quarter of positive GDP growth.
In a related story, Southern California’s regional economic indicators improved slightly in the third quarter, according to a report today by California State University in Fullerton.
The change in the index was minimal – rising only 0.19 percent – indicating that any improvement in the economy in the near-term will be slight. The most positive indicators were an inflation-adjusted rise in the money supply, a slight decrease in the regional jobless rate and improvement in the interest rate spread.
On the other hand, declining regional stock prices (Fullerton’s quarterly index did not include October’s upturn in the market) and continuing weakness in regional consumer confidence, building permits and employment prospects continued to indicate that growth will remain sluggish.
Click HERE for a link to USD’s index.
Click HERE for access to Fullerton’s economic forecasts.