Saturday, June 07, 2003
Copyright © Las Vegas Review-Journal

May economic gauge up from year ago

Population growth, home demand offset job outlook

Click image for enlargement. Mark Suciu of Southern Wine and Spirits delivers liquor Friday to Lee's Discount Liquor on East Sunset Road in Henderson. Taxable sales improved in a May gauge of local economic health. Photo by John Locher.

Southern Nevada's economy continues to be propped up by an influx of new residents and the resulting demand for housing even though job growth has slowed to 2.1 percent.

All but four categories in the Southern Nevada Index of Leading Economic Indicators showed positive gains in the latest month compared with a year ago, led by a 32.9 percent increase in new-home permits.

The May index, compiled by the Center for Business and Economic Research at the University of Nevada, Las Vegas, stood at 127.56, down from 128.16 in April and up from 127.02 in May 2002.

The index is a six-month forecast based on seasonally adjusted data in 10 weighted categories.

The accompanying Review-Journal chart reflects several of the index's categories, along with other data such as new residents and employment and housing numbers.

"There's still concern that employment is not growing as fast," Keith Schwer, professor of economics at UNLV and director of the research center, said Friday. "But if you look at Southern Nevada, even though it's been sluggish, we have continued to grow. Even if we discount that the numbers are less than perfect, it's still an early indication of recovery."

More than 7,500 people moved to Las Vegas in April, a 16.2 percent increase from the same month a year ago, as measured by the number of out-of-state driver's licenses turned into the Department of Motor Vehicles. Attrition, or the number of people leaving the area, is generally about 25 percent of that number.

New home sales grew 2.1 percent to 1,788 in April, the latest month of data, but it was existing home sales that skyrocketed 26.9 percent to a record 4,047, Home Builders Research reported.

Permit activity is catching up from last year, when builders had backed off construction in the aftermath of the terrorist attacks.

The war in Iraq brought a decline in the economic index, Schwer said, with visitor volume, convention attendance and commercial real-estate activity posting the largest declines.

Still, one key indicator -- taxable sales -- showed an improvements of 5.7 percent.

Losses in March's numbers, the month used by CBER for May's index, are likely to be made up in the months ahead, Schwer said.

"But we see no signs at this time of a strong sustained upward expansion," he said.

"The war's over with but all of the uncertainties are still there. The stock market has picked back up. It's still not absolutely clear, though most of the indicators are in the right position for recovery."

Nevada's real economic success depends upon the recovery of the national economy, said Jim Shabi, economist for the Nevada Department of Employment, Training and Rehabilitation.

"The end of the war brought considerable optimism to the stock market, but it could not mask problems in the national labor market," Shabi said.

Job losses have been substantial in recent months, and the nation has now lost about 2 million jobs over the past two years, he noted.

The manufacturing sector has suffered the most, shedding more than 1.7 million jobs.

Nevada's economy has been protected somewhat by its minimal dependence on manufacturing, which accounts for 4 percent of Nevada's employment compared with 12.5 percent nationally.

Four of Nevada's 20 largest manufacturing companies make gambling equipment and have benefited from the expansion of gambling in other states.

"Increased business investment, especially investment in new employees, remains the key to a full recovery," Shabi said.