Southern Nevada economic index falls in September

The Southern Nevada Index of Leading Economic Indicators fell in September following two months of gains, further evidence that the local economy is bouncing along the bottom and lagging any national recovery, a report from the Center for Business and Economic Research showed.

The index slipped to 123.41 in September, down 0.68 percent from 124.29 in August and down from 125.78 in the same month a year ago.

After seasonal adjustment and weighting, eight of the 10 series of data used in the index contributed to the decline, while residential building permits made a positive contribution and convention attendance had no effect.

Although the downturn in the index isn't a good sign for short-term job creation, the trend over the past year has been favorable, said Bob Potts, assistant director of the research center at University of Nevada, Las Vegas.

Potts noted that employment in the leisure and hospitality industry grew by 3.1 percent to 262,200 in July. However, higher-paying construction employment fell to 39,900 from 45,300 a year ago.

"Job creation is what it's all about," Potts said Monday. "Our economy depends on people spending money. If people don't have jobs, if people don't have income, they don't spend. If they don't spend, businesses don't hire. It's a downward spiral."

The economic index, compiled by the research center, is a six-month forecast from the month of data, based on a net-weighted average of each series after adjusting for seasonal variation. September's index is based on July data.

The Clark County Construction Index remains depressed at 45.85 in July, down from 49.60 a year ago. The five-month moving average appears to have bottomed out at 48.52 in December and climbed to 51.63 in July.

A monthly increase in the number of construction jobs and commercial permits drove recent improvements, Potts said. Although the series is still showing year-over-year declines, the rate of decline has slowed as construction activity approaches "a very low maintenance level," he said.

More favorably, sales of existing homes are at near-record levels, which suggests that absorption of excess inventory may be gaining momentum, Potts added.

A separate Clark County Business Activity Index declined to 154.80 in July, falling nearly 2 percent from June. All three index components declined from June. Gaming revenues were down by 6.8 percent, taxable sales by 8.1 percent and total employment by 0.6 percent.

The index measuring activity in the Southern Nevada tourism sector slipped by more than 5 percent in July, but posted a 4.4 percent improvement from a year ago. The 6.8 percent decline in gaming revenue and 0.2 percentage point drop in hotel occupancy rates contributed to the decline.

"Overall, the Nevada tourism sector continues to show improvement over last year, but conditions still remain somewhat volatile," Potts said.

With the U.S. economy showing growth sprouts, the gap between the U.S. economic index of leading indicators and Southern Nevada's index has widened.

At risk is long-term consumer confidence, Potts said. A slowing of U.S. consumption spending translates into weak job growth, he said.

"People are afraid out there," Potts said. "They're just not spending or they can't get financing for one reason or another."

Although U.S. economic activity is slow, current indicators provide no convincing evidence that a "double-dip" recession is imminent, said Stephen Brown, director of the UNLV Center for Business and Economic Research.

The six-month percentage change in the U.S. Leading Economic Index is positive, suggesting the economy will expand in the near future rather than head toward another downturn, he said.

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