Index: Local economy shows signs of decline


Southern Nevada's economy continued to show signs of decline as nearly every indicator fell from a year ago, the Center for Business and Economic Research reported.

Building permit activity produced some of the larger percentage drops, while total employment edged down for the second straight month and gaming revenue slipped for the sixth straight month.

The Southern Nevada Index of Leading Economic Indicators declined to 130.63 in June, down from 133.06 in the same month a year ago.

Seasonality and weighting of the 10 indicators used by the University of Nevada, Las Vegas research center caused passenger traffic at McCarran International Airport to be the biggest drag on the index.

Rising energy prices have sent fares up, resulting in a weaker tourism market, said Keith Schwer, executive director of the center.

"Fewer people came, and they spent less money," he said.

Not only are fewer people visiting Las Vegas, fewer people are moving to Las Vegas. Schwer counted 5,445 new residents in June, a 16.4 percent decrease from a year ago.

Employment growth, always a strong suit for Las Vegas, dipped 0.7 percent. The unemployment rate shot to 6.5 percent from 4.8 percent a year ago, now above the national rate.

"There's definitely weakness and year-over-year employment declines," said economist and research analyst Peter Janson of the Nevada Department of Employment, Training and Rehabilitation.

The weak sectors are construction, finance and insurance. Accommodations and food services are showing positive trends. Gaming companies are getting leaner through a slight reduction in work force, Janson said.

"Gaming win is down and taxable sales are down," he said. "The dangers out there are gas prices and credit and house prices. These are unprecedented times to make a call."

The index, compiled by the Center for Business and Economic Research, is a six-month forecast from the month of the data, based on a net-weighted average of each series after adjustments for seasonal variation.

The accompanying Review-Journal chart includes several of the index's categories, along with data such as new residents, and employment and housing numbers, updated for the most recent month for which figures are available.

Prevailing current opinion reveals less confidence in the economic fortunes of Southern Nevada than at any time since the 2001 recession, Schwer said.

"Indeed, we find a marked shift in opinion from a highly optimistic tone just a year ago to a decidedly more pessimistic current outlook," he said in a quarterly report based on a survey of local businesses.

The three biggest concerns they have for 2009 are energy prices, inflation and the value of the U.S. dollar. Respondents also believe housing will remain a drag on Nevada's economy over the next six months, Schwer said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.