State economic indicator sees moderate growth in June

            The Leading Economic Indicator for Nebraska rose by 0.87 percent in June. This increase in the indicator, which is designed to predict economic growth six months in the future, followed a small increase in May.

            Faculty and students in the Department of Economics and Bureau of Business Research in the University of Nebraska-Lincoln College of Business Administration calculate the Leading Economic Indicator for Nebraska. It is a composite of six components that predict future economic growth: single-family building permits, airline passenger counts, initial unemployment claims, manufacturing hours, the value of the U.S. dollar, and business expectations gathered from the Survey of Nebraska Business.

            The size of the increase in the indicator in June suggests moderate growth in the Nebraska economy at the end of the year, said University of Nebraska-Lincoln economist Eric Thompson, director of the Bureau of Business Research.

            A sharp drop in initial unemployment claims was the primary reason for the increase, Thompson said. Single-family building permits also increased during June, in line with the continued improvement in the housing market. Airline passenger counts and manufacturing hours both declined slightly, while exporters were hurt by an increase in the value of the dollar during June.

            "The increase in June was not broad-based. Just two of the six components rose," Thompson said. "This, along with the weak increase in the indicator during May, suggests moderate rather than strong growth in the Nebraska economy at the end of 2013."

            The drop in initial unemployment claims, however, suggested optimism in the state's short-term economy, he said: "This is a positive economic signal, since business owners are more likely to hang on to their workers when they anticipate a future increase in demand."

            The full Nebraska Monthly Economic Indicators report and a Technical Report describing the latest indicators are available at the College of Business Administration website, http://www.cba.unl.edu.