A slight surge in taxable sales and visitor volume drove the Southern Nevada Index of Leading Indicators higher in September, continuing an up-and-down pattern that has shown little improvement in the overall economy for the past year.
The index stood at 125.78 in September, up from 125.34 in the previous month, but down from 126.26 in September 2009, the Center for Business and Economic Research reported Thursday.
Of the 10 categories that contribute to the index, five were negative and five were positive. Taxable sales and visitor volume led the gains, while residential building permits and residential permit valuation dragged the index down.
The economic index, compiled by the research center 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. September’s index is based on July data.
The accompanying chart includes several of the index’s categories, along with data such as new residents, employment and housing numbers, updated for the most recent month for which figures are available.
Separate indexes measuring Clark County business activity and tourism remained fairly flat, while the construction index continued its downward trend to 50.64, the lowest level since January 1988, when the index stood at 50.37.
Construction employment has more than doubled since then, but residential and commercial permitting activity has declined to about one-third the volume, said Bob Potts, assistant director of the economic research center.
Workers in the construction sector are no longer employed in new building, but have found other construction-related work such as repairs, remodeling and infrastructure, he said.
Southern Nevada’s total employment slipped to 790,300 in August, down 2 percent from a year ago, and the economic index suggests little change in the number of jobs expected to be created in the next four to six months.
"It (job growth) has always lagged the rest of the economy," Potts said. "People get laid off and businesses aren’t going to rehire them until they feel comfortable with the economy."
The health care sector has added a few jobs to the economy, but it’s still "pretty soft," Potts said. That’s better than construction, which is "brutal," he said.
Although tourism has looked like the first industry to moderate, the index dropped by another 2.5 percent in July as hotel occupancy rates and passengers through McCarran International Airport remained flat, and gaming revenues declined another 5 percent.
"We’re so dependent on discretionary income," Potts said. "What goes on in the nation’s economy will dictate visitation to Las Vegas."
An economic upturn in Las Vegas remains several quarters away, and local job and housing market volatility will remain a drag on consumption and retail operations through the end of the year, a third-quarter report from commercial brokerage Marcus & Millichap said.
Hotel discounts helped increase visitor volume from year-ago levels, but consumer caution continues to suppress spending and gaming revenues, limiting job gains in the leisure and hospitality sector, the report said.
Contact reporter Hubble Smith at email@example.com or 702-383-0491.