A measure of the local economic outlook posted a marked increase in September, the strongest seen in the last six months, according to the University of San Diego's Index of Leading Economic Indicators for San Diego County. (graph)
The index rose by 1 percent in September -- the sixth consecutive monthly increase -- lifted in large part by another sharp uptick in consumer confidence.
Although September marks the fifth straight month that consumer confidence has led the index, it remains to be seen whether that confidence will translate into consumer spending, said USD economics professor Alan Gin, who compiles the index.
Confidence levels were decimated earlier in the year, so the monthly increases are simply a return to normalcy rather than an indicator of optimism, Gin said in a recent phone interview.
“Any sort of change off that bottom translates into a pretty big number,” he said.
The holiday shopping season will be a telling indicator as to whether consumers are ready to start spending, Gin added.
The index’s monthly gain reinforces the idea that the county's economy is approaching a bottom, anticipated for the first half of next year. The local economy will remain weak for the balance of 2009, Gin wrote.
Building permits also posted a strong increase of 1.37 percent, the largest since June of last year. Despite the bounceback, authorized residential units are still down 48 percent through the third quarter compared to the same period in 2008, Gin noted.
The national economic outlook also rose. Local stock prices turned down slightly in September.
Both labor market indicators -- initial claims for unemployment insurance and help-wanted advertising -- were negative, although help-wanted advertising seems to have stabilized.
"Economic activity may already be picking up, but businesses tend to be cautious in terms of hiring new workers until they are sure that a recovery is taken hold," Gin wrote. "The local unemployment rate is expected to approach and may top the 11 percent mark before improving."
The local unemployment rate stood at 10.2 percent in September, down from a revised 10.6 percent in August.
“The rate of job loss has slowed ever so slightly,” Gin said. “We're not out of the woods yet, but it's less bad than it has been.”