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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:

DEC 2015: 58

 

 

 

It wasn’t too hard to see what December would bring for Rhode Island’s economy: like the nation, Rhode Island slowed a bit further, as weakness in our goods-producing sector continued, becoming a bit worse than was the case in November. Ironically, almost everyone here overlooked this entirely and instead chose to celebrate the decline in our state’s jobless rate to 5.1 percent, presuming as they so often do that the Unemployment Rate by itself is a sufficient basis with which to characterize our state’s economic performance. Obviously, that presumption is false for two reasons. First, while our jobless rate was at its lowest value in many years, recent rates are not comparable to rates in earlier years since at present, participation rates are much lower than they were back then. Perhaps more importantly, to accurately assess economic performance, it is necessary to evaluate the performance of a broadly based set of indicators, which is precisely what the Current Conditions Index does.

 

For December, the Current Conditions Index fell from its November value of 75 all the way back to 58, its level in April, and a continuation of its downward trajectory from the August high of 92, as only seven of the twelve CCI indicators improved. In a sign of what we might see more frequently going into 2016, the CCI this month failed to beat its level from a year ago, ending a streak of nine consecutive months for which we had either matched or exceeded year-earlier values.

 

There was some good news for December. The weakness in the CCI value largely reflected that fact that overall, our negatives grew relative to our positives. This should not come as a total surprise, however, given the slowdown in growth nationally. As has been true for several months now, much of our recent weakness continues to be concentrated in our state’s goods-producing sector, in manufacturing and new home construction.

 

TTotal Manufacturing Hours, a measure of manufacturing sector strength, fell by 2.9 percent in December, its seventh decline in the last nine months and its worst decline in well over a year. Along with this, the Manufacturing Wage declined yet again, this month by 3.3 percent. New home construction, in terms of Single-Unit Permits, fell by 11.5 percent in December, partly the result of a difficult comp a year ago. This follows a bizarre increase of 58.6 percent in November. I still don’t understand what is happening with this indicator. US Consumer Sentiment fell for the first time in fifteen months (-1.0%).

 

Government Employment -1.3
US Consumer Sentiment -1.0
Single-Unit Permits -11.5
Retail Sales 5.5 Y
Employment Services Jobs 5.1 Y
Priv. Serv-Prod Employment 2.4 Y
Total Manufacturing Hours -2.9
Manufacturing Wage -3.3
Labor Force 1.1 Y
Benefit Exhaustions -32.7 Y
New Claims -13.3 Y
Unemployment Rate (change) -1.7 Y
Y = Improved Value

 

Among December’s seven improving indicators were only two of the CCI’s five leading indicators. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, rose by 5.1 percent, among its highest growth rates in quite some time. This indicator has clearly strengthened since June. Finally, New Claims, a leading labor market indicator that reflects layoffs, fell by 13.3 percent in December, assisted by a very easy comp one year ago.

 

Retail Sales growth reaccelerated in December (+5.5%), making this its nineteenth consecutive improvement. Private Service-Producing Employment, one of the indicators whose monthly growth has not slowed of late, rose by another 2.4 percent in December. Government Employment fell again (-1.3%). Benefit Exhaustions, which reflects longer-term unemployment, declined by 32.7 percent relative to last year. While our Labor Force managed to sustain its recent uptrend on a yearly but not monthly basis (+1.1%), it fell back to its April level. Because of this, my major concern moving forward continues to be the declines in both our employment rate and labor force participation rate that began in July. Bothremain well below their recession levels. So, once again, Rhode Island finds its Unemployment Rate falling for the wrong reasons. Any comparison of the current and 2007 jobless rates is purely spurious.

 

 

THE BOTTOM LINE

Rhode Island ended the year on a bitter sweet note, as the Current Conditions Index fell back to 58, its level in April, and a continuation of the slowing of growth that began in August. Ironically, most people here continue to think that our state’s growth rate is accelerating, based on an inappropriately focused view that the Unemployment Rate tells us all we need to know about our state’s rate of growth. While payroll employment growth here has accelerated of late, we need to see if this is confirmed by the rebenchmarked labor market data that will be released shortly. Even if it is, we will still be 20 percent below our prior employment peak of December of 2006.

 

  

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

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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