Visitor volume, fuel sales boost Southern Nevada economic index

The Southern Nevada Index of Leading Economic Indicators rose to 124.29 in August, repeating the 0.53 percent month-over-month growth it showed in July, the UNLV Center for Business and Economic Research reported Wednesday.

The index has a decided upward tilt this year, punctuated by two straight months of growth, said Bob Potts, assistant director of the research center at the University of Nevada, Las Vegas.

It signals that Southern Nevada's employment could be rising by early next year, even though the unemployment rate remains elevated at 14 percent.

The jump in the index was driven mostly by gains in visitor volume and gasoline consumption, which contributed positively when adjusted for seasonal variation,. Visitor volume grew nearly 7 percent from a year ago to 3.32 million in June.

Taxable sales and residential building permits showed modest gains, while other components in the index contributed little or fell.

"We're going in the right direction," Potts said Wednesday. " I want to see three months of positive gains before you really feel confident that's the way things are going."

The economic index, compiled by the 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. August's index is based on June data.

The index's rise is an encouraging sign amid national and international uncertainties that could drag down discretionary income, an essential for Southern Nevada's tourism industry, Potts said.

"I'm somewhat optimistic because when people are down on stuff, Vegas is countercyclical. People come to Vegas instead of going on a European vacation," he said.

A separate Clark County Business Activity Index was essentially unchanged from May to June, though it grew by 2.61 percent from a year ago.

The Clark County Tourism Index in June was 0.19 percent over May and 11.1 percent over the same period a year ago. The year-over-year growth was led by a 19.9 percent jump in gaming revenues, while hotel occupancy rates and airline passenger counts also rose substantially.

The most dismal numbers showed up in the Clark County Construction Index, which continued to slip. Of the component series, only residential permits rose. The commercial sector slipped in permits and permit valuation. Construction employment is down 6,800 jobs from a year ago and down 72,400 jobs from 2006.

"For the construction sector to recover strength, Las Vegas needs stronger population and business growth so excess inventories can be absorbed and new construction is profitable," Potts said.

Retail sales continued to improve through July, and visitors have spent more in Las Vegas, providing a boost, said Rick Phillips, president and chief investment officer of Main Street Capital Advisors. Gaming revenue and room rates have both increased, he said.

Phillips said debt crises in Washington and Europe have hurt consumer confidence and the stock market.

"We believe that the stock market's extreme volatility and decline in August will hamper spending for a few months," he said.

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