Rhode Island Current Conditions Index

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 2018: 92

Fortunately for Rhode Island, April's economic performance did indeed turn out to be somewhat of an outlier, as I had suspected (actually hoped for, keeping my fingers crossed). Better yet, not only was the April Current Conditions Index value revised higher, from 67 to 75 (the decline in the Manufacturing Wage was reversed last month), for May, the Current Conditions Index rebounded sharply, reaching all the way to 92, as eleven of twelve indicators improved. May's CCI value is tied with February for the highest level this year. And as strong monthly performances go, May was a very good month. I think it is safe to say at this point that barring an escalating trade war, fears of Rhode Island potentially activating its longer-term FILO status were indeed premature.

The two most important statistics with which to gauge May's performance are indicators that nobody in this state other than me ever discusses. Both the labor force participation rate and the employment rate rose relative to a year ago in May. More importantly, their May performances continued uptrends that began in January. The labor force participation rate, the percentage of our resident population that is in the labor force, rose to its highest level since March of 2016. The employment rate, the percentage of the resident population that is employed, attained its highest value since late 2008. While both remain well below their prior cyclical highs, their May performances, along with the continuing uptrends, are, nonetheless, encouraging. Better late than never, I guess (i.e., the LO in FILO)!

Even with this month's good economic news, it is important to keep our recent economic performance in perspective. While the May CCI value was very good, May was only the second month this year for which the CCI exceeded its year-earlier value. Some concerns remain, most notably the trend for New Claims, the most timely measure of layoffs. While this fell in May after rising in April, resumption of its downtrend remains questionable, making this one of the more critical indicators to pay attention to in the coming months. And, let me not forget the mindless economy watchers, for whom the Unemployment Rate tells all: The unthinkable occurred again - our Unemployment Rate failed to improve for the fourth consecutive month, no doubt perpetuating their fears of the imminent collapse of Western Civilization. At least this was accompanied by both a monthly and annual rise in our state's Labor Force, its eleventh consecutive rise - truly a major feat in Rhode Island!

Government Employment	0.2	Y
US Consumer Sentiment	0.9	Y
Single-Unit Permits	3.8	Y
Retail Sales	4.0	Y
Employment Services Jobs	2.2	Y
Priv. Serv-Prod Employment	1.5	Y
Total Manufacturing Hours	7.5	Y
Manufacturing Wage	2.1	Y
Labor Force	1.2	Y
Benefit Exhaustions	-29.9	Y
New Claims	-13.4	Y
Unemployment Rate (change)	0.0
Y = Improved Value

In a testament to May's overall momentum, all five of the leading indicators contained in the CCI improved this month, with four of the five advancing despite difficult comps a year ago. New Claims declined sharply in May (-13.4%), although the existence of its downtrend remains in question. Rhode Island's goods-producing sector's performance improved again in May. Total Manufacturing Hours, a proxy for manufacturing output, an important element of Rhode Island's strength over the past two years, rose strongly in May (+7.5%) based improvements in both employment and the length of the workweek. Single-Unit Permits, which reflect new home construction, increased, albeit at a much slower rate (+3.8%) than last month. May was only its third increase in the past six months. Rhode Island's ability to continue building on its 2017 momentum will require continued strength from our goods-producing sector. Rising mortgage rates, a stronger US Dollar and tariffs can all be expected to generate headwinds through the remainder of this year. Employment Service Jobs, a leading labor market indicator that includes temporary employment, rose again in May (+2.2%), resuming the slower growth trend of earlier this year. US Consumer Sentiment improved in May (+0.9%), its fourth consecutive improvement, but it too faces issues moving forward, most notably as the result of trade tensions.

Retail Sales grew again (+4.0%), although well below its recent double-digit rates, and close to its lower growth range of late. Government Employment rose from its level a year ago (+0.2%), while Private Service-Producing Employment growth remained above the one percent level (+1.5%). Finally, Benefit Exhaustions, the most timely measure of longer-term unemployment, fell sharply in May (-29.9%), following a surprising double-digit increase in April.

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	7 5	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

You can download monthly reports in PDF format starting
with January 1999 by clicking on the monthly index value.

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

Monthly CCI Values (red = recession) (Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data.

Historical Annual CCI Values

Monthly CCI Values (red = recession)
(Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data.