As I write this week’s economic commentary, the Dow Jones Industrial Average (DJIA) is up over 500 points on lower initial claims for unemployment insurance, and lower inflation, and robust retail sales data.
The rise in the DJIA is a leading indicator for the local economy as it is highly correlated with local firm’s share prices. Rising share prices reflect the markets’ expectation of future firm cashflows and profitability. Locally, initial claims for unemployment insurance lag the national releases, but climbed slightly in May and June. Inflation in the South census region has also fallen to the same level as the national figure, 2.9%.
Although retail sales data is not available at the local level, employment in the retail sector has remained steady at just over 27,000 for the last year. This is lower than the post-COVID peak of 27,700 in April 2022, but higher than the pre-Covid levels.
The DJIA, inflation, and initial claims for unemployment insurance make up 3 of the 5 components of the Augusta Leading Economic Index (LEI). The other two are residential building permits and job openings. Residential permits saw a big bump in June, increasing to 630 on the strength of several multi-unit structures. Job openings in Georgia and South Carolina, weighted by MSA employment, have also increased for three consecutive months.
Overall, the three-month moving average Augusta LEI has increased for four consecutive months, representing a positive outlook for real economic activity for the next three to six months.
