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:
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.
Rhode Island's economy showed more strength in June than we have become accustomed to. More importantly, this month's data provided further evidence that Rhode Island's rate of economic growth is continuing to move farther above its disappointing value of only 1.2 percent last year. The Current Conditions Index for June attained a respectable value of 75, its highest yet this year, as nine of the CCI indicators improved relative to their values last June. Better yet, the CCI has now matched or exceeded its year-earlier value for the last four months!
Underlying this was yet another strong month for labor market data. As was true for May, virtually all of the key labor market numbers in June moved in the direction we want them to move and for the right reasons. This was especially true for our Unemployment Rate which was once again accompanied by an improving Labor Force (both on a monthly and yearly basis). For Rhode Island, as strange as this might sound, that's a big deal, since our state's Labor Force had until recently been declining for two consecutive years (on a year-over-year basis). Ironically, this meant that the dramatic declines in our state's Unemployment Rate were largely spurious, since they were generally occurring in spite of improving employment, driven primarily by a Labor Force that continued to trend lower. While we have still only recovered about 70 percent of the jobs lost during the last recession, the pace at which these lost jobs are being recovered now appears to be accelerating.
Rhode Island's June economic performance really was quite good. Nine indicators improved overall, which included four of the five leading indicators contained in the Current Conditions Index. New home construction, in terms of Single-Unit Permits, improved for the first time since the harsh winter weather ended, moving above 1,000 annual units (seasonally adjusted), its highest value since February of 2013. Even better, it finally exceeded its twelve-month average. Total Manufacturing Hours, a measure of manufacturing sector strength, also declined in June (-1.8%), its third consecutive decline, but it did have a very difficult comp to beat from last June (+4.4%). All of the remaining leading indicators contained within the CCI improved in June. US Consumer Sentiment rose at a double-digit rate (+16.6%) for the ninth consecutive month. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, improved at its most rapid rate since last August (+5.5%). This was its fourth consecutive improvement, and it occurred in spite of a very difficult comp from last June. Finally, New Claims, a leading labor market indicator that reflects layoffs, fell by 16.7 percent in June, sustaining its well-defined downtrend.
Retail Sales turned in another strong performance in June (+6.1%), following a double-digit rise in April and a 9.7 percent gain in May. This indicator has now improved for fourteen consecutive months. Private Service-Producing Employment increased by 2 percent in June, its most rapid growth rate since last August. Its rate of improvement has been accelerating for the past three months. Government Employment again failed to improve, declining by 1.3 percent for June, its worst performance in over a year. Benefit Exhaustions, which reflects longer-term unemployment, fell by 22.8 percent relative to last year. For those into fiction, Rhode Island's Manufacturing Wage declined for the sixteenth consecutive time in June (-5.3%). Rhode Island's Labor Force sustained the end of its two-year string of year-over-year declines, rising by a hefty (for us) 0.6 percent in June. And, for only the second time in a very long time, Rhode Island's Unemployment Rate declined, this month to 5.9 percent (from an upwardly revised 6 percent in May), accompanied by large jumps in both resident employment (+13,500 or 2.6% year-over-year) and payroll employment (5,700 or 1.2%), along with a substantial decline in the number of unemployed (9,900 or 23.1%). Let's hope our state's Labor Force has now begun to increase on a sustained basis.
You can download monthly reports
in PDF format starting
Historical Annual CCI Values
Copyright © 2014 Leonard Lardaro, Ph.D. All rights reserved.