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County's leading economic indicators up slightly in June

The University of San Diego Burnham-Moores Center for Real Estate's Index of Leading Economic Indicators for San Diego County rose 0.1 percent to 126.6 in June, up from May's revised value of 126.5.

The gain was led by a big increase in consumer confidence and smaller positive moves in help wanted advertising and building permits, according to USD professor Alan Gin, who compiles the index. These were nearly counterbalanced by drops in initial claims for unemployment insurance and local stock prices. The outlook for the national economy was unchanged. The five advancing components outweighed the one declining one to push the USD Index to its ninth straight gain and 17th in 18 months.

June's advance was the 10th straight for the USD Index and the 18th gain in 19 months. The outlook remains for solid growth in the local economy through the end of 2013 and into at least the first half of 2014.

Average wage and salary job growth in San Diego County in the first half of 2013 was up over 26,000 compared to the first half of 2012. If that pace could be maintained over the second half of the year, it would be the best annual job growth since 2000. There is some concern about whether the pace can be maintained, as recent year-over-year growth comparisons have been weak. While every sector in the local economy experienced some job growth, the biggest gains were in administrative and waste services (up 4,900), leisure and hospitality (up 4,700), heath care (up 3,300), professional, scientific, and technical services (up 2,850), non-public educational services (up 2,200), and government (up 1,300).

Residential units authorized by building permits were up for a fifth consecutive month, but just barely. For the first half of 2013, residential units authorized were up almost 29 percent compared to the same period in 2012. Both single-family and multifamily permits were higher compared to the first half of 2012, with the former advancing by 39 percent and the latter by 24 percent.

The labor market variables continue to be mixed. Job losses continue to edge up, as measured by initial claims for unemployment insurance. But hiring plans are also up, with help wanted advertising increasing for the eighth straight month, which puts that component at its highest level since May 2008. The net result was that the local unemployment rate increased to 7.3 percent in June from 6.8 percent in May. The increase was largely due to seasonal factors, as schools letting out put more people into the workforce. A comparison with June 2012, which removes the seasonality, shows a drop of two full percentage points in the unemployment rate (from 9.3 percent to 7.3 percent).

Consumer confidence was up sharply in June and reached its highest level since September 2007. The Conference Board cites increased consumer optimism about both business conditions and the labor market.

Local stock prices suffered their first losing month of the year, mirroring the broader market averages. For the first half of 2013, local stocks were up 17.67 percent, compared to gains of 13.78 percent for the Dow Jones Industrial Average, 12.63 percent for the S&P 500, and 12.71 percent for the Nasdaq Composite.

The national Index of Leading Economic Indicators rose for the third month in a row and for the sixth time in seven months. The "advance" estimate of second-quarter gross domestic product growth had not been released as of the date of this report, but the expectation is for positive but slow growth.

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