Local economic index flat in October

A local measure of economic activity remained relatively unchanged in October, having signaled a downturn from last year with declining numbers in nearly every series of data.

The Southern Nevada Index of Leading Economic Indicators registered 130.60 in October, a slight rise from 130.44 in September, but down from 132.67 in October 2007.

The October index, based on August data, showed significant declines in both residential and commercial building permits and valuation.

Residential permits dropped 33.1 percent in August to 1,576 units and the value of those permits declined 31.4 percent to $204.5 million. Commercial permits were down 32.7 percent to 76 and valuation dropped 55.4 percent to $82.8 million.

Gaming revenue was off 9.4 percent to $759.3 million in August and passenger traffic through McCarran International Airport fell 9.9 percent to 3.88 million.

The index, compiled by the Center for Business and Economic Research at University of Nevada, Las Vegas, is a six-month forecast from the month of data, based on a net-weighted average of each 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.

"It hasn't gone further down and it hasn't given any signals that it's going back up," Keith Schwer, executive director of the UNLV research center, commented on the index's movement. "We haven't seen anything positive, and we're not like to see any."

Schwer said Las Vegas is dependent on what's happening nationally and internationally and there's been no clear signal at all from the federal recovery plan, just deep concerns about rising unemployment and the drop in retail sales.

Schwer said he sees economic woes in Las Vegas continuing into 2009. The unemployment rate has jumped to 7.4 percent, higher than the national rate, and will continue upward, he said.

Visitor volume has declined, but only by 2.5 percent through September, compared with the year-ago period. Gaming revenue has dropped about 9 percent.

"They're just not spending as much," Schwer said. "I suspect other expenditures are down. They're not going to high-end restaurants. They're going for fast food or buffets. They're not buying as many gifts. We haven't lost as many customers, but I wonder about the mix, not as many high-end."

Of the 30 indicators in the Associated General Contractors Southern Nevada industry tracking series, only six reported positive movement from a year ago.

Population in-migration is at its lowest level since 1995, residential permitting is at its lowest level since 1994 and unemployment is at its highest rate since 1985, AGC reported in its third-quarter market briefing.

"The construction industry's outlook during the next four quarters points to continued softening," the AGC report said. "Office, industrial land retail market vacancy rates are all rising. Under-construction inventories are rapidly moving off their respective peaks, as the powerful combination of insufficient demand and unavailable financing provide formidable barriers to any new project."

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