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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:

OCTOBER 2018: 42

 

 

While the third quarter of 2018 was disappointing, the fourth quarter started out in a manner that can only be described as awful. Rhode Island’s October economic performance ranks as one of its worst in recent memory. Not only did the Current Conditions Index fall below its neutral value of 50 for the first time since August of 2016, the individual performances of a number of its indicators leave much to be concerned about. Not surprisingly, we failed to exceed the year-earlier CCI value yet again this month. Among the leading indicators contained in the CCI, none managed to improve in October. So, the declining trend in CCI values that began in May continued into October. As I noted last month, we are continuing to experience the end of the “sugar high” from prior-year weakness, facing comps that have become increasingly difficult to beat with the inevitable result that our relative economic performance continues to fall to lower values as there are fewer strongly improving indicators.

 

The good news, and there is a little, is that the CCI trend since the recent May high has not been straight down. The October CCI results pertain to a single month yet continue a disturbing trend. Further confirmation of a true downtrend is still required before we can interpolate longer-term trends. Perhaps the most potentially optimistic note is that historically, labor market values for October through December are those most likely to be altered with rebenchmarking. I’m not so sure we will see that, given that the national economy and those of Europe and Asia are also slowing, and that Rhode Island has richly earned its status as FILO. So, the question continues: Are we in the FI stage? 

No matter how it is viewed, one thing remains clear: Rhode Island’s rate of growth is continuing to slow. The string of weakening CCI values indicates that the foundation of this recovery is standing on fewer “legs,” as our negatives continue to gain relative to our positives.

 

The October Current Conditions Index value is its lowest since August of 2016, 42, a contraction value, as only five of its twelve indicators improved relative to a year ago. This was the eighth time this year the CCI has failed to exceed its year-earlier value. Worse yet, though, not one of the five leading indicators contained in the CCI improved this month, although four of the five had difficult comps a year ago.

 

New Claims, the timeliest measure of layoffs, rose by double digits in October (+11.3%), its third increase in the last five months. Layoffs appear to be in the early stages of what might prove to be an uptrend, a very unwelcome result should it prove to be true. Rhode Island’s goods-producing sector’s performance was its worst in a while. Total Manufacturing Hours, a proxy for manufacturing output, what had been an important part of Rhode Island’s recent strength, fell this month (-0.2%). This was its first decline since March, the result of a shorter workweek. The Manufacturing Wage fell again in October (-1.8%). Single-Unit Permits, which reflect new home construction, continued its recent string of declines (-1.9%), its fifth decline in the last five months. Employment Service Jobs, a leading labor market indicator that includes temporary employment, failed to improve for only the second time in four months (-0.9%) after rising both prior two months. US Consumer Sentiment fell in October (-1.9), challenging its recent uptrend. In light of recent stock market weakness and a strengthening US Dollar, much of the weakness observed with these indicators in October is likely to persist as we move to the end of 2018.

 

Government Employment -0.5
US Consumer Sentiment -1.9
Single-Unit Permits -1.9
Retail Sales 3.6 Y
Employment Services Jobs -0.9
Priv. Serv-Prod Employment 1.3 Y
Total Manufacturing Hours -0.2
Manufacturing Wage -1.8
Labor Force 0.9 Y
Benefit Exhaustions -8.3 Y
New Claims 11.3
Unemployment Rate (change) -0.7 Y
Y = Improved Value

 

Both of the “left behind” indicators failed to improve in October, as their uptrends that began in January are in question. The labor force participation rate, the percentage of our resident population in the labor force, fell in October (to 64.8 percent). The employment rate, the percentage of the resident population that is employed, has plateaued around 62 percent since May. Sadly, both remain well below their prior cyclical highs (see table).

 

Retail Sales grew again (+3.6%), Government Employment fell from its level a year ago for a second consecutive month (-0.5%), Private Service-Producing Employment growth slid, while still remaining above one percent (+1.3%), and Benefit Exhaustions, the timeliest measure of longer-term unemployment, resumed its downtrend in October. The Unemployment Rate continued its monthly declines, but so too did our Labor Force.

 

 

 

 

  

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 67   67 58 58 67 50 67 67 75 67 58 67
2015 58   58 67 58 67 75 75 92 83 67 75 58
2016 58   67 50 42 50 42 67 75 75 50 58 75
2017 75   83 92 83 83 83 83 83 75 83 92 83
2018 75   92 75 67 92 83 75 67 67 42    

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 2014 2015 2016 2017    
70 55 74 75 63 64 56 85    

 

Historical CCI Values

Copyright © 2014 Leonard Lardaro, Ph.D. All rights reserved.

 

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