Tourism numbers drive sharp monthly gain in economic index

The Southern Nevada Index of Leading Economic Indicators turned in one of its highest monthly gains in the 30-year history of the series in March, climbing more than 1 percent to 123.82, the UNLV Center for Business and Economic Research reported Monday.

The jump was driven mainly by January's gains in travel and tourism, including an 8.4 percent increase in visitor volume and 3.8 percent rise in gaming revenue. Convention attendance grew by nearly 300 percent to 615,854 in January.

The Clark County Business Activity Index, also compiled by the research center at University of Nevada, Las Vegas, showed a slight gain to 154.08 in January, up 0.6 percent from the previous period and essentially unchanged from the same month a year ago.

Of the three measures in the index, taxable sales showed the biggest gain, growing 6 percent on a year-over-year basis. Gaming revenue and employment showed small declines of 0.4 percent and 1 percent, respectively.

Overall, the index suggests the economy has stabilized and employment could begin rising by the end of the year, said Bob Potts, assistant director at the research center.

"Quite honestly, I was relieved to see the January numbers come in as high as they did," Potts said. "Of course, it's only one month. We want to see two or three more months of growth for proof that we're pulling off the bottom."

Las Vegas is still reeling from the downturn in two important categories -- housing and jobs.

"We got kind of the double-barrel effect because we're so dependent on people's discretionary dollars and if they screw up their balance sheets and income statements, they don't come here. That's why we have this crazy unemployment (13.7 percent)," he said.

Clark County's Tourism Index trended up in January, climbing 3.8 percent from December and 4.4 percent from a year ago. Convention business has rebounded, contributing to the surge, Potts said.

The national economy continues to put out "good vibes" with stocks edging higher on Monday, said Brian Sozzi, senior research analyst for New York-based Wall Street Strategies.

The Labor Department's jobs report, combined with the rosier gauge on small-business hiring from staffing firm ADP, made it through the weekend relatively unscathed, he said.

"Note, though, that the underemployment rate is sitting at 15.7 percent and clearly there are structural issues for those deciding to refrain from jumping back into the labor pool," Sozzi said. "For the time being, the market's attention is on job creation and what that means for the animal spirits of stocks once the Fed concludes its bond-buying program in June."

Unemployment and underemployment remain a major concern in Southern Nevada, CBER's Potts said. Construction employment has been the biggest drag on Clark County's Construction Index for three years. More than 6,000 jobs were lost in the past year.

Residential and commercial permitting activity showed significant gains in January, though the valuation of those permits is down substantially from its peak.

"With real estate vacancies remaining high and household and business formation remaining low, it's unlikely the construction sector will see much growth in the near future," Potts said.

The economic index, compiled by the research center at the 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. March's index is based on January data.

Potts said it's hard to delineate between certain sectors in the index. However, the tourism industry appears to be gaining ground with hotel occupancy rates, visitor volume and consumer spending all up.

"It's low, but it's coming and it's been consistent," he said. "A lot of it is driven by uncertainty. People got hurt and they don't know what tomorrow holds."

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