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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:

JUL 2015: 75

 

 

 

The magic number is now up to five - for five consecutive months, the Current Conditions Index has either matched or exceeded its year-earlier value. July was yet another very good month for Rhode Island, as its overall economic performance continued to improve and its labor market appears to be sustaining the kind of momentum we haven’t seen for a while now. The CCI for July was 75, tied for its highest value this year, as nine of the twelve CCI indicators improved. Clearly, Rhode Island’s rate of growth is continuing to accelerate above last year’s tepid 1.2 percent rate as the present recovery becomes more broadly based.

 

As of the beginning of 2015, Rhode Island’s labor market had at long last begun a meaningful recovery from the Great Recession, as both the labor force participation rate and the employment rate began to rise simultaneously. This indicates that we are finally witnessing a period where Rhode Island’s Unemployment Rate is declining in the way we want it to, and not as the statistical byproduct of unemployed persons dropping out of the Labor Force. For Rhode Island, as strange as this might sound, that’s a big deal.

 

Let’s not overstate all of this, however. Rhode Island has still recovered less than three-fourths of the jobs it lost during the last recession. At least we can say that the pace at which these lost jobs are being recovered appears to now be accelerating. Better late to “the party,” I guess, than never getting there at all. This is true to form for Rhode Island’s historical performance - among the first into recession and among the last states to truly recover. 

 

Rhode Island’s July economic performance was quite good. Nine indicators improved overall. While only three of the five leading indicators contained in the Current Conditions Index improved, the two that failed to improve both had very difficult comps to beat from last July. New home construction, in terms of Single-Unit Permits, fell very sharply this month (-19.4%) compared to last July, after an apparently (at the time) encouraging jump last month. But last July, Single-Unit Permits had surged by over 26 percent, so it is not entirely surprising that this indicator failed to improve this month. Total Manufacturing Hours, a measure of manufacturing sector strength, also declined in July (-1.4%), its fourth consecutive decline, but it too had a very difficult comp to beat from last July (+3.9%). All of the remaining leading indicators contained within the CCI improved in July. US Consumer Sentiment rose at a double-digit rate (+13.2%) for the tenth consecutive month. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, improved at a double-digit rate (+10.2%), its most rapid rate since January of 2013. This was its fifth consecutive improvement. Finally, New Claims, a leading labor market indicator that reflects layoffs, fell by 7.8 percent in July, sustaining its well-defined downtrend.

 

Government Employment 0.3 Y
US Consumer Sentiment 13.2 Y
Single-Unit Permits -19.4
Retail Sales 6.9 Y
Employment Services Jobs 10.2 Y
Priv. Serv-Prod Employment 2.1 Y
Total Manufacturing Hours -1.4
Manufacturing Wage -1.9
Labor Force 1.0 Y
Benefit Exhaustions -26.4 Y
New Claims -7.8 Y
Unemployment Rate (change) -1.8 Y
Y = Improved Value

 

Retail Sales turned in another strong performance in July (+6.9%), following close to double-digit increases in April and May. This indicator has now improved for fifteen consecutive months. Private Service-Producing Employment increased by 2.1 percent in July, its most rapid growth in over a year. Its rate of improvement has now accelerated for the past three months. Government Employment actually rose slightly in July (+0.3%), its first increase since last June. Benefit Exhaustions, which reflects longer-term unemployment, fell by 26.4 percent relative to last year. For those into fiction, Rhode Island’s Manufacturing Wage declined for the seventeenth consecutive time in July (-1.9%). Rhode Island’s Labor Force sustained the end of its two-year string of year-over-year declines, rising by a hefty (for us) 1.0 percent in July. And, for only the third time in a very long time, Rhode Island’s Unemployment Rate declined, this month to 5.8 percent, accompanied by large jumps in both resident and payroll employment, along with a substantial decline in the number unemployed.

 

THE BOTTOM LINE

Rhode Island’s economy continued to strengthen in July accompanied once again by fairly strong labor market data. The CCI has now matched or exceeded its year-earlier value for the most recent five months, which, as I cited last month, is occurring in spite of the fact that our state literally did nothing for several years. We continue to witness our state’s economy improving based almost entirely on national and neighboring-state momentum. Fortunately for us, the recently enacted legislation should prolong this momentum once its effects begin to be felt later this year. At last we will begin to benefit increasingly from internally generated momentum!

 

  

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          

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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