August Lardaro CCI signals positive third quarter

GROWTH witnessed in August is underlined by the fact that nine of 12 indicators in the Current Conditions Index, including unemployment rate, saw improvements, according to University of Rhode Island economist Leonard Lardaro. / COURTESY LEONARD LARDARO
GROWTH witnessed in August is underlined by the fact that nine of 12 indicators in the Current Conditions Index, including unemployment rate, saw improvements, according to University of Rhode Island economist Leonard Lardaro. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – After a “truly disappointing” second quarter, University of Rhode Island economist Leonard Lardaro found the August current conditions index rose to 75 from the revised 67 measured in July, showing the start to a more positive third quarter.

Released Wednesday, the CCI reported an eight percentage point jump in the month-to-month comparison. CCI measurements, which analyze the findings of 12 indicators, higher than 50 suggest economic growth, a value below 50 indicates contraction.

August marks the second consecutive month, and third occurrence, this year when the CCI has met or exceeded its value from the previous year.

The state’s unemployment rate fell 0.2 percent in August and new claims, which reflect layoffs, rose by 12.5 percent – its fifth increase in the last six months.

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The growth witnessed in August is underlined by the fact that nine of 12 indicators, including unemployment rate, saw improvements, whereas seven categories saw improvement in July.

Government employment rose by 1.7 percent, but “we cannot and should not rely on increases,” in this sector, said Lardaro.

In addition, single-unit permits increased 1.2 percent in August, the second time it has done so since April, and remained below 1,000 annual units.

Retail sales, which helped revise the July CCI by nine additional percentage points, rose by 2.9 percent in August – its second increase in six months, while a 1.5 percent increase was witnessed in private service-producing employment.

Lardaro said the 0.5 percent increase in total manufacturing hours, the fourth consecutive increase, was a, “pleasant surprise” and a “proxy for manufacturing output” as the manufacturing wage indicator rose by 4.7 percent in August.

The labor force rose, 0.4 percent in August for the first time in 27 months as benefit exhaustions, which represents longer-term unemployment, fell by 7.3 percent.

Losses were seen in U.S. consumer sentiment, which fell by 2.4 percent in August – its eighth decline in the last nine months – and employment service jobs, a prerequisite to employment growth, which includes temporary employment, fell by 0.1 percent in August – its sixth consecutive decline.

Looking forward, because of the way the Rhode Island economy reacts to national movements, he said, “Hopefully, Rhode Island’s second quarter slide will serve as a wakeup call to our state’s elected officials that even now, almost 10 years after our prior employment peak, we remain far too vulnerable to slowing national activity.”

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