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:
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.
Here we go again! Rhode Island began the second quarter in much the same way it had progressed throughout the first quarter - mediocre economic performance. For April, the Current Conditions Index fell from its March value of 67, which had actually beat its year-earlier value, a rare event indeed, back to 58, its value for the other months of 2014 thus far. Clearly, no weather-related distortions were at work in April. To put things here into a rather depressing perspective, Rhode Island's economy has failed to demonstrate the ability to consistently exceed its performance in the prior year. According to recently released data, we find ourselves unable to match or exceed a year for which the Rhode Island economy grew at a 1.2 percent rate, which was itself a noticeable decline from our 2013 growth rate of 1.9 percent. Will the upcoming months be more of the same, even without any excuses for weather, or will the pace of economic activity here finally begin to accelerate along with that of the national economy? Stay tuned. There is some reason for optimism: Governor Raimondo has accomplished more meaningful change with her first budget (assuming this largely passes) than this state has undertaken since before The Great Recession.
Rhode Island's April economic performance was worse than it was in March, as only seven of the twelve CCI indicators improved relative to their values last April. Of the five leading indicators in the Current Conditions Index, three improved in April. And two of them were assisted by easy comps from last April. The results for the two leading indicators that failed to improve stand out. Even without weather-related distortions, new home construction failed to improve, as Single-Unit Permits fell by 5.8 percent from last April. While this is admittedly a volatile indicator, the 745 permits (at an annual rate) in April was well below its twelve-month average. The recent upturn in mortgage rates could pose head winds for this indicator. Total Manufacturing Hours, a measure of manufacturing sector strength, also declined in April (-0.8%) following two months of improvement, as a sharp decline in the workweek more than offset the positive effects of a small employment gain. Unlike the last two months, the change in manufacturing employment was proportionately smaller than that of the workweek, causing Total Manufacturing Hours to fall. Suffice it to say that April was not a very good month for Rhode Island's goods-producing sector.
Each of the remaining leading indicators contained within the CCI improved in April. US Consumer Sentiment rose at a double-digit rate (+14%) for the seventh consecutive month. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, improved by a hefty 3.6 percent, its second consecutive improvement. However, this number was somewhat inflated based on an extremely weak comp (-3.3%). Finally, New Claims, a leading labor market indicator, fell by 13.1 percent in April, sustaining its well-defined downtrend following a distorted December value.
Retail Sales turned in an exceptional performance in April (+10.7%), helped greatly by a weak comp last April (–4%). Still, Retail Sales here remain very strong. This indicator has risen for fifteen of the last sixteen months. Private Service-Producing Employment increased by 1.2 percent in April, weaker than its March growth, and only its second greater than one percent rate since October. Government Employment again failed to improve, declining by 0.2 percent for April. Benefit Exhaustions, which reflects longer-term unemployment, fell by 32.8 percent relative to last year. For those into fiction, Rhode Island's Manufacturing Wage declined for the fourteenth consecutive time in April (-4.2%). Rhode Island's Labor Force continued its well-defined downtrend that began in late 2012 and intensified after June of 2014. April was the twenty-fourth consecutive year-over-year decline in our Labor Force. This downtrend continued to be fundamental in helping our state's Unemployment Rate fall to 6.1 percent in April.
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in PDF format starting
Historical Annual CCI Values
Copyright © 2014 Leonard Lardaro, Ph.D. All rights reserved.