Friday, July 09, 2004
Copyright © Las Vegas Review-Journal

Index suggests further economic expansion in valley

Indicators for travel, tourism segment flash positive signs

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The Southern Nevada Index of Leading Economic Indicators continues to move upward, suggesting economic expansion for the remainder of the year, a local economist said Thursday.

The index, compiled by the Center for Business and Economic Research, climbed to 129.23 in June, up from 128.84 in May. It was above 130 as recently as February.

The index is a six-month forecast from the month of the data, which in this case is April, based on a net-weighted average of 10 series after adjustment 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.

Of particular note, visitor volume, passenger counts at McCarran International Airport and gallons of gasoline purchased -- all strong indicators for Southern Nevada's travel and tourism sectors -- contributed in a large and positive manner to the index, said Keith Schwer, director of the Center for Business and Economic Research.

"These are factors driving the index," he said. "Look at the strength of what has happened over the last year. The percent change in each series except one is in double-digits."

Taxable sales grew 13.8 percent to $2.39 billion and gaming revenue rose 11.5 percent to $678.7 million.

The construction series, all up from year-ago levels, have shown signs of a recent slowdown from the rapid pace of activity during the past year, though they're still at a high level of performance.

New home permits more than doubled from a year ago to 4,501 in May, a single-month record, according to Home Builders Research.

Commercial permit building valuation totaled $151.5 million in April, up 230 percent from the previous month and 422 percent from a year ago.

"We're as busy as ever, probably 75 percent ahead of revenues from last year," said Steve Brockman, president of Builders Capital, a local provider of private money and institutional loans for commercial and residential real estate development.

Accordingly, construction employment is leading the job growth, up more than 10 percent from a year ago.

Total employment in Southern Nevada grew 4.6 percent to 856,600 and the unemployment rate was 3.7 percent, the lowest since May 2000, said Jim Shabi, economist for the Nevada Department of Employment, Training and Rehabilitation.

"It's been pretty solid," he said. "Those numbers are hard to argue with. Nevada is running a couple percentage points over the next state. Arizona and Virginia are right up there."

John Restrepo, principal of Restrepo Consulting Group, said Southern Nevada's commercial and residential real estate markets are based on solid fundamentals, which is basically job growth.

"Everything is very strong right now," he said. "Las Vegas' economy continues to be really healthy relative to regional and national economies, and they're improving as well. We're not the only bright star in the universe."

Shabi said the only downside to Southern Nevada's economy is the housing market, which is slowing a little, but gaming and tourism have come back despite concerns about Iraq, terrorism and oil prices.

"All in all, Southern Nevada will share in the nation's economic expansion for the months ahead," Schwer said.