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BACKGROUND

The Current Conditions Index (CCI) is a monthly indicator that details the present state of the Rhode Island economy by following the behavior of twelve key economic indicators pertaining to housing, retail sales, fiscal pressures, the employment situation, and labor supply:

  • Government Employment
  • Employment Services Jobs*
  • Retail Sales
  • University of Michigan US Consumer Sentiment Index**
  • Single-Unit Housing Permits
  • Private Service-Producing Employment***
  • Manufacturing Man-hours****
  • Average Hourly Manufacturing Wage
  • Seasonally Adjusted Unemployment Rate
  • Resident Labor Force
  • New Initial Claims for Unemployment Insurance
  • Unemployment Insurance Regular Benefit Exhaustions

The CCI ranges from 0, when no indicators improve compared to year-earlier levels, to 100, when all twelve show improvement. Values above 50, the "neutral" value, indicate that the Rhode Island economy is expanding, while values below 50 are indicative of contraction. Prior to "The Great Recession" that began in June of 2007, the CCI had never attained a value of 0, indicating that no indicators improved relative to year-earlier values. This changed in 2008, when the CCI fell to 0 on three occasions, and in 2009, when another value of 0 was recorded. Prior to this, the low for the CCI had been 8, which occurred for only a single month on several occasions. For almost all of 2008, the CCI recorded values of 8. The CCI attained its maximum value of 100 on several occasions, for almost all of 1984 and once in 1986. Note that these values occurred exclusively when Rhode Island was still a manufacturing-based economy.

*
Up until February 2006, the CCI used Help Wanted Advertising for Providence, RI as one of its indicators (and toward the end of its use an econometric adjustment was required). This indicator replaces Help Wanted Advertising.
** Prior to the October 2001 report, the CCI used Existing Home Sales in Rhode Island. This indicator replaces Existing Home Sales. 
*** Prior to the January 2003 report, Miscellaneous Service Employment, a major category of the SIC codes, was used. Now that NAICS replaces the SIC codes, the current indicator was chosen to replace Miscellaneous Service Employment.
****Beginning with the November 2005 report, Manufacturing Man-hours will be referred to as Total Manufacturing Hours.

 


THE CCI THIS MONTH
MONTHLY HIGHLIGHTS:

SEPTEMBER 2014: 75

 

 

 

Rhode Island’s economy is on a tear, kind of. After stumbling somewhat in the second quarter of 2014, the pace of this recovery picked up noticeably in the third quarter, as the Current Conditions Index managed to reach and sustain a value of 75 for all three months of that quarter. This performance is significant for a couple of reasons. First, and foremost, the August CCI exceeded its year-earlier value, something we hadn’t witnessed in twelve months. Second, the string of 75 values were the highest recorded in 2014, outpacing earlier-year values of 50, 58, and 67. The gray area, however, is that September’s CCI value only matched its value from last September, failing to extend the string of yearly improvements. But this is Rhode Island, where nothing economic is ever all that easy. So let me modify my recent criterion, actually soften it a bit, to apply to Rhode Island’s current situation: we have now matched or exceeded year-earlier CCI values for two consecutive months.   

 

Our transition from a period where the current recovery was becoming less broadly based into one where increased momentum is being sustained thus continues. That is a big deal, especially for this state. So,as we move into the fourth quarter of 2014, there is a fairly high probability that our state’s economic performance is not decoupling from the accelerating national economy after all.

 

In September, four of the five leading indicators contained within the Current Conditions Index improved. The sole leading indicator that failed to improve was Total Manufacturing Hours, which measures strength in our manufacturing sector. This indicator fell for the first time in over a year (-0.3%), following slower growth since June. While manufacturing employment rose, the length of the workweek fell slightly. As has been true for some time now, the Manufacturing Wage declined, for a seventh consecutive time in September, by a bizarre and difficult to believe 6.6 percent. Were the BLS to conduct a direct survey of the Manufacturing Wage here my guess is that its actual level would be well below their inflated estimates over the past few years.

 

Government Employment -0.7
US Consumer Sentiment 8.7 Y
Single-Unit Permits  36.7 Y
Retail Sales 4.7 Y
Employment Services Jobs 2.3 Y
Priv. Serv-Prod Employment 1.6 Y
Total Manufacturing Hours -0.28
Manufacturing Wage -6.6
Labor Force 0.5 Y
Benefit Exhaustions -12.3 Y
New Claims -7.4 Y
Unemployment Rate (change) -1.9 Y
Y = Improved Value

 

Single-Unit Permits, which reflects new home construction, had declined in August by 8.7 percent (year-over-year) after a string of strong performances. This volatile indicator rose by a mind-boggling 36.7 percent in September relative to its value last year. So, while the momentum derived from Rhode Island’s goods-producing sector may be moderating, weakness in manufacturing is being at least partially offset by strength in housing.

 

New Claims, which is a leading labor market indicator, fell by 7.4 percent in September, breaking a string of two consecutive double-digit declines. This indicator has now improved for six of the past seven months, a very healthy sign as we move into the fourth quarter. Employment Service Jobs, which includes temporary employment, and is a prerequisite to employment growth, rose for the third consecutive month (+2.3%). Its rate of growth has been increasing over this three-month stretch, another positive sign as we move forward. Finally, US Consumer Sentiment rose in September (+8.7%), its second increase following a string of three consecutive declines.

 

Retail Sales remained strong in September, increasing by 4.7 percent compared to a year ago. This indicator has now improved for eight of the last ten months. Private Service-Producing Employment rose by 1.6 percent in September, with growth slowing over the past three months. Not surprisingly, Government Employment failed to improve once again. For September, it declined by 0.7 percent. Its recent performance strongly points to it having bottomed at 60,000. Benefit Exhaustions, which reflects longer-term unemployment, fell 12.3 percent relative to a year ago. September marked the fifth double-digit improvement for this indicator in the last six months.

 

Finally, Rhode Island’s Labor Force rose by 0.5 percent versus a year ago, although it declined relative to August. Along with this, our Unemployment Rate remained at 7.6 percent, third nationally.

 

THE BOTTOM LINE

In September, Rhode Island sustained its recent economic momentum, as the Current Conditions Index registered a value of 75, matching its values for both July and August. This is a turning point of sorts, since the CCI not only sustained its highest value for this year, we have now matched or exceeded year-earlier CCI values for two consecutive months. Rhode Island’s recovery thus appears to be on its way to becoming more broadly based. IF we are able to sustain this momentum, Rhode Island will further close the gap between its performance and that of the overall US economy.

 

  

Monthly CCI Values (red = recession)
(Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data.

Jan   Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1983 42   58 58 67 75 83 83 75 83 83 83 92
1984 100   92 100 100 100 100 100 92 100 92 92 83
1985 67   75 75 75 67 75 67 50 50 58 83 67
1986 75   83 100 92 92 83 92 92 92 92 92 67
1987 67   67 58 58 67 75 75 75 75 67 75 75
1988 83   83 75 67 67 67 58 50 67 58 50 58
1989 67   50 50 33 58 33 25 25 25 33 33 33
1990 25   25 25 25 17 17 17 17 33 17 25 25
1991 25   17 17 8 25 17 25 25 25 33 17 17
1992 42   42 58 75 75 83 75 67 67 83 83 92
1993 75   83 67 67 83 67 75 75 75 58 42 58
1994 58   67 67 58 58 75 67 67 67 67 83 75
1995 58   58 58 67 50 42 42 42 58 33 67 42
1996 50   42 75 75 67 75 75 67 75 92 83 92
1997 100   92 83 75 67 75 75 75 83 75 92 83
1998 83   75 75 75 75

75

75 67 58 75

75

50

1999 83   75 75 83 67 83 75 75 92 75 83 58
2000 83   83 83 67 42 50 58 50 58 67 67 67
2001 42 33 25 17 33 50 25 33 33 42 33 42
2002 58   75 67 58 42 33 50 50 58 67 67 50
2003 50   50 50 58 58 58 83 67 83 75 92 67
2004 67   67 58 67 58 58 67 67 67 58 50 67
2005 50   67 50 50 42 75 58 67 42 58 58 67
2006 58   58 67 58 33 50 33 58 75 83 58 67
2007 50   50 33 33 58 50 33 33 17 17 8 25
2008 8 8 8 17 8 0 8 0 8 0 8 8
2009 17 8 0 8 17 33 17 42 33 42 50 33
2010 42   58 67 67 75 75 83 83 67 67 75 83
2011 50 67 67 58 50 58 58 42 50 50 58 50
2012 58   50 58/75 50/75 58/67 67/75 50/58 67/75 50/58 75/83 75/83 92
2013 75   67 83 67 83 75 75 67

75

75 67 75
2014 75   58 58 58 67 50 75 75 75      

You can download monthly reports in PDF format starting
with January 1999 by clicking on the monthly index value.
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Historical Annual CCI Values

1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
42
54
33
74
96
67
88
69
65
39
1990
1991
1992
1993
1994
1995
1996
1997
1998

1999

22
21
70
69
67
51
72
81
72
77
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
65
39
56
66
63
57
54
40
7
24
2010 2011 2012 2013            
70 55 74 76            

 

Annual CCI Values

Copyright © 2008,2009, 2010Leonard Lardaro, Ph.D. All rights reserved.

 

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