Upticks in gaming revenue, tourism lift economic index

A late-year upturn in Las Vegas tourism helped push the Southern Nevada Index of Leading Economic Indicators up one-half percent in December to 123.02, following a drop of 0.7 percent in November, the UNLV Center for Business and Economic Research reported.

The positive movement was driven mainly by a 6.7 percent increase in October gaming revenue from the previous month and a 9.7 percent increase in passengers at McCarran International Airport.

Other series in the index essentially canceled each other out, said Bob Potts, assistant director of the research center at the University of Nevada, Las Vegas.

For nearly two years, the index has followed an up-and-down pattern, suggesting that the local economy can expect little change in job growth for the first half of the year, Potts said Monday.

"We have the national index going up and we're going to follow the national economy," Potts said. "We're hoping that discretionary income will filter down to us, but we don't see any significant improvement through the first half of 2011."

The whole idea of reading the index is to forecast job growth, Potts said. Employment is to the local economy what gross domestic product is to the national economy, he said.

Southern Nevada's employment fell 2.6 percent from a year ago to 793,400, while the unemployment rate rose to 14.3 percent from 12.5 percent.

One of the hardest-hit employment sectors was construction, which lost about half of the industry's work force during the recession.

Although still posting year-to-year double-digit declines, the Clark County Construction Index has slowed its rate of decline to 17.7 percent in October from 40 percent in October 2009. October showed the first uptick in the index's five-month moving average in more than a year.

An increase in the number of new construction jobs and residential building permits drove these recent improvements, Potts said. Nonetheless, it's premature to say that the construction sector has reached bottom, he said.

"We may see other sectors improve some," Potts said. "We're seeing it right now in tourism. If discretionary income on the national or international level goes up, that's going to be a good thing for us."

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

The Clark County Tourism Index grew by 3.5 percent from September to October and is now up nearly 6 percent from a year ago, the UNLV research center reported. All three index series showed positive yearly growth, led by gaming revenue.

Not since July 2007 has the tourism index posted such strong growth, Potts noted. The seasonally adjusted index is at 142.90 and it will be a long time before it gets back to prerecession levels, but it's on a "welcome growth path," Potts said.

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