San Diego County’s economic outlook improved sharply during the early part of this year, fueled by sharp increases in home-building permits, local stock prices and help wanted ads, along with a sharp drop in new unemployment claims, according to the latest report on leading economic indicators released from the University of San Diego.
“The local economy is off to a strong start in 2013,” said economist Alan Gin, who compiles the report for USD’s Burnham-Moores Center for Real Estate.
Over the past three months, he said, local employers have been on track to add 30,000 jobs this year, compared to 25,000 jobs last year.
But he added that federal budget cuts -- which are only beginning to kick in -- could keep the growth rate much closer to last year’s rate. Already, shipbuilders have begun a wave of about 5,000 layoffs along the waterfront due to the sequester and the wind-down of the war in Afghanistan, and smaller job cuts at military bases, defense contractors and scientific laboratories.
Gin said the county will feel the impact worse than other areas of the nation, “given the significance to San Diego’s economy of the military and of funding for scientific research.” But he said despite the cuts, “we’ll probably still do better than last year. Just not great.”
The USD index, which has been released on a monthly basis since October 1991, had been delayed since December because Gin needed to change his source of job-posting data from the online employment site Monster.com, which has stopped producing the data, to the state Employment Development Department, or EDD.
Gin says the reconstituted index rose by a relatively strong 0.4 percent in December and 0.3 percent in January before jumping 0.9 percent in February -- its strongest showing in almost a year. Except for a minor decline last August, the indicators have risen steadily since November 2011 and are now at their highest point since February 2008.
Items that fueled February’s growth spurt included:
* Employment -- Initial claims for unemployment insurance in San Diego County have dropped by 6 percent in the past year, while job postings have risen for 25 out of the past 26 months, based information from the EDD. Gin says hiring activity has helped whittle the local jobless rate from 9.4 percent in February 2012 to 8.0 percent in February 2013.
* Home-building -- More than 1,000 residential building permits were issued in February, the first time since March 2007 that builders crossed that barrier. That growth reversed a three-month decline, although -- as has been true for years -- apartment and condo projects heavily outweighed single-family homes. More than 80 percent of the permits were for multifamily units.
* Stock prices -- As the Dow Jones and Standard & Poor’s stock indexes surged to all-time highs over the past three months, local stocks rose along with it. Realty Income Corp. (NYSE: O), Sempra Energy (NYSE: SRE), ResMed (NYSE: RMD), WD-40(Nasdaq: WDFC) and BofI Federal Bank (Nasdaq: BOFI) are among the local companies currently hovering in record-setting territory.
* The national economy -- Despite a weak jobs report in March and anemic growth in the gross national product, the national Index of Leading Economic Indicators is forecasting a solid year for the national economy. Economists project that the national unemployment rate will slide to 7 percent by the end of the year from the current 7.6 percent
The only negative item in Gin’s index was consumer confidence, which has fallen for two months in a row. Gin blames higher gas prices, payroll tax hikes and the “political gridlock” in Washington, D.C.