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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:

JANUARY 2015: 58

 

 

 

The revised labor market data have now been released. They show higher payroll employment, a welcome statistic, and significant declines in our Unemployment Rate through much of 2014. This is as good as it has been for a while - our labor market is performing better than it has for some time and we are witnessing the return of a number of key labor indicators to their 2008 levels. That’s the good news.

 

Unfortunately, Rhode Island employment peaked all the way back in December of 2006 - over eight years ago. As of January, we have now replaced only about two thirds of the jobs lost since that peak. Furthermore, Rhode Island’s labor force has been in a well-defined downtrend since late 2012, which apparently intensified after June of 2014, which helps to explain part of the dramatic recent “improvement” in our state’s Unemployment Rate. Ironically, resident employment was revised lower as well. Because of these two revisions to the household survey, I choose to view the downward revisions to our state’s Unemployment Rate somewhat skeptically.

 

In light of the newly released labor market data, Current Conditions Index values throughout 2014 were not as satisfactory as we had previously been led to believe. Revised months are indicated at the bottom of this report with arrows. Three months were revised higher while three were lower. While this sounds like a “wash,” it indicates that we failed to sustain the string of 75 values from July through September, attaining that value only once last year, in September. This is the type of economic performance that inevitably emerges from a state such as ours that is in dire need of major structural reforms, most notably to taxes, fees, regulations, energy costs, and the lack of skills of our Labor Force. Fortunately for us, Governor Raimondo is addressing all of these areas in her upcoming budget.

 

In January, three of the five leading indicators contained within the Current Conditions Index improved. US Consumer Sentiment rose sharply once again in January (+21.1%), its sixth increase following three consecutive declines, helped by declining energy prices and an improving stock market. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, rose in January by 2.1 percent. Based on the revised labor market data, this indicator has now improved for seven consecutive months following a string of declines. New Claims, a leading labor market indicator, fell by 8.2 percent in January, resuming its well-defined downtrend following December’s value that was adversely affected by technical factors.

 

Government Employment -0.2
US Consumer Sentiment 21.1 Y
Single-Unit Permits -8.3
Retail Sales 4.2 Y
Employment Services Jobs 2.1 Y
Priv. Serv-Prod Employment 1.6 Y
Total Manufacturing Hours -1.1
Manufacturing Wage -4.0
Labor Force -1.1
Benefit Exhaustions -23.7 Y
New Claims -8.2 Y
Unemployment Rate (change) -2.1 Y
Y = Improved Value

 

Total Manufacturing Hours, a measure of manufacturing sector strength, fell by 1.1 percent in January, its second decline in the last three months, the result of a sharp decline in the length of the workweek. Along with this, the Manufacturing Wage declined for the eleventh consecutive time, by a difficult to comprehend 4.0 percent. Single-Unit Permits, a volatile indicator that reflects new home construction, fell by 8.3 percent following improvement last month. Viewed along with our state’s January manufacturing performance, the momentum provided by Rhode Island’s goods-producing sector continues to fluctuate.

 

Retail Sales improved for the twelfth time in the last thirteen months, increasing by 4.2 percent compared to a year ago, following a 9 percent rise in November and 5.4 percent in December. Private Service-Producing Employment increased by 1.6 percent in January, its most rapid growth rate since last August. Not surprisingly, Government Employment failed to improve again, declining by 0.2 percent for January, remaining around 60,000. Benefit Exhaustions, which reflects longer-term unemployment, fell by 23.7 percent relative to a year ago.

 

Finally, Rhode Island's Labor Force fell for the twenty-first consecutive month (year-over-year) while our Unemployment Rate declined to 6.5 percent.

 

 

THE BOTTOM LINE

The recent labor market data revisions contained several positives for Rhode Island, most notably that payroll employment performed better than we thought, returning to 2008 levels. While our jobless rate was revised lower, so too was our labor force, which continues a well-defined downtrend that began in late 2012, responsible for a significant portion of the recent jobless rate declines, especially those since June of last year. On a positive note, our state's recovery is continuing, aided in large part by national economic momentum. In order for us to shift into a higher gear, we can no longer postpone essential structural reforms that will allow us to grow more rapidly.

 

  

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                        

You can download monthly reports in PDF format starting
with January 1999 by clicking on the monthly index value.
getacro.gif (776 bytes)

 

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          
70 55 74 76 64          

 

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

 

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