SOUTH KINGSTOWN – Despite lagging behind the last half of 2012 in terms of economic growth, revised figures for the second quarter of 2013 show that the quarter is “progressing a little better for Rhode Island than had previously been thought,” according to University of Rhode Island economist Leonard Lardaro, who released his Current Conditions Index on Monday.
Lardaro’s CCI, which uses a dozen data points to measure momentum in the state economy, came in at 83 for May, up from a revised 75 in April. April’s CCI was originally reported as 67, marking the first time in 2013 the monthly reading failed to beat the year-ago number. With the revised figure, April’s economic growth bettered its year-over-year value.
A CCI indicator greater than 50 indicates economic growth, while a value below 50 suggests contraction. The state’s economy showed particularly strong signs of growth late in 2012, posting CCI readings of 92 in August and October and 83 for November and December.
For May, 10 of the 12 indicators followed by the CCI improved, with overall labor force and government employment falling or remaining steady during the month.
Several of the CCI indicators improved despite “comps” in 2012, according to Lardaro, who said that “overall, several trends continue to take shape, and May points to the possibility that Rhode Island may re-accelerate in the second half of 2013.”
Lardaro said that the primary question for Rhode Island is whether or not the improved values later this year – “assuming they occur” – are improvements over the end of 2012. “This will not be easy for Rhode Island, but it is certainly not out of the question for us to see this occur,” said Lardaro, adding that it would be “more than welcome news for our state.”
Despite an overall cautiously positive tone in his report, Lardaro said: “Don’t interpret the most recent data as indicating that Rhode Island’s economy has already substantially strengthened, or that it is in the process of jumping to much higher rates of growth.
“What we are seeing is that after consolidating gains from late last year, Rhode Island’s economy has begun to gain momentum, at least through May,” he said. “All of this is defining how Rhode Island’s economy continues to recover from The Great Recession.”
All four of the CCI’s leading indicators turned in “strong performances” in May. Single-unit permits, a leading indicator of housing, rose 33 percent and have settled into a range of 70 or more permits per month.
Employment service jobs, which includes temporary employment, rose 3.5 percent in May.
Another labor market indicator – new claims for unemployment insurance – continued its downward trend during the month. Lardaro said this was “critical if Rhode Island is to continue improving as we move through 2013.”
The final leading indicator – total manufacturing hours – measures strength in the manufacturing segment and rose 1 percent from May 2012.
“The second quarter is turning out to be better than we had previously thought,” said Lardaro, adding that moving forward, the state’s future economic momentum will be directed by events on both the national and global levels.
“I continue to expect a strengthening national economy as we move into the third quarter that should clearly benefit Rhode Island, helping us cope with the headwinds we face,” said Lardaro. “But only time will tell if this assessment proves to be correct.”