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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:

MAY 2014:67

 

 

Rhode Island’s economy bounced back a bit from its earlier-year woes in May. Following a string of three consecutive 58 values, the Current Conditions Index rose to 67 in May, matching its January value. While Rhode Island’s overall performance in 2014 has been somewhat disappointing, perhaps the May bounce will turn out to be the beginning of a prolonged period of stronger economic activity driven in large part by an improving national economy. Clearly, there have been a number of positives during the first part of this year, most notably improvements in both payroll and resident employment, and along with the latter, a full percentage point decline in our state’s Unemployment Rate. Yet in spite of this good news, Rhode Island’s performance continues to lag in terms of several metrics, the most obvious being the #1 national ranking of our state’s jobless rate that has been sustained for far too long a period. So, while our state’s absolute economic performance continues to improve, its relative performance remains problematic. Sadly, this trend hardly something new. I will continue to describe the overall economic performance of Rhode Island’s economy as precarious, citing the fact that May was the tenth consecutive month where the CCI failed to improve relative to its year-earlier value.

 

For May, only three of the five leading indicators contained within the Current Conditions Index improved, but two of those did so at healthy rates. Fortunately, the two that failed to improve do not necessarily signal any real weakness in our state’s economy or the possibility of a transition to slower growth. US Consumer Sentiment fell by 3.1 percent in May, ending a string of five consecutive increases. This decline very likely reflected stock market performance that has since reversed. Employment Service Jobs, which includes temporary employment, and is a prerequisite to employment growth, fell by another 1.1 percent in May, its sixth consecutive decline. Suffice it to say that I continue to view changes in this indicator somewhat suspiciously.

 

Single-Unit Permits, which reflect new home construction, and was adversely impacted by winter weather earlier in the year, turned in a strong performance in May, rising by 9 percent relative to last May. Total Manufacturing Hours, which measures strength in our manufacturing sector, rose sharply again in May (+3.1%), as both the length of the workweek rose and manufacturing employment increased by 900. Oddly, in spite of this manufacturing momentum, the Manufacturing Wage actually declined for a third time in May, by 2.3 percent. New Claims for Unemployment Insurance, the timeliest measure of layoffs, declined, albeit slowly in May, for a third consecutive month and sixth time in the last seven months. In spite of its recent improvements, it is not yet clear whether this indicator has resumed the longer-term downtrend that will be critical to our sustaining May’s overall momentum in the coming months.

 

Government Employment -0.2
US Consumer Sentiment -3.1
Single-Unit Permits 9.0 Y
Retail Sales 4.9 Y
Employment Services Jobs -1.1
Priv. Serv-Prod Employment 1.4 Y
Total Manufacturing Hours 3.14 Y
Manufacturing Wage -2.3
Labor Force 0.0 Y
Benefit Exhaustions -13.1 Y
New Claims -0.3 Y
Unemployment Rate (change) -1.3 Y
Y = Improved Value

 

Retail Sales remained strong in May, rising by just under 5 percent compared to a year ago. This indicator has now improved for eleven of the last twelve months. Based on its recent performance, it is one of the strongest CCI indicators. Benefit Exhaustions, which reflects longer-term unemployment, improved at a double-digit rate in May (-13.1%), registering its second consecutive double-digit improvement. Private Service-Producing Employment rose by 1.4 percent in May, the same rate of improvement it displayed in April. Its rate of growth has remained above the one-percent level since January. Government Employment fell once again, declining by 0.2 percent versus last May. Its level has clearly plateaued around 60,000, which was its May value. Finally, Rhode Island’s Labor Force actually rose in May, by a mighty 0.02 percent. Prior to this month, the last time the Labor Force rose was last April. Along with this encouraging Labor Force change came a significant drop in our Unemployment Rate, all the way from 9.5 percent last May to “only” 8.2 percent this year, still #1 nationally.

 

THE BOTTOM LINE

Rhode Island's May performance could be a sign that our state is at long last in the process of regaining the momentum we witnessed at the end of 2012. Will this recovery become more broadly based than it has become of late or will we revert to where we have been during the first part of 2014? The first true sign of improvement will be our ability to exceed year-earlier CCI values, something we haven't done for ten consecutive months. True improvement will mean that our state's economic performance will not only be gaining momentum in absolute terms (looking only at us) but in relative terms as well (compared to the nation).

 

  

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              

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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