Lardaro: Economic momentum shifted into higher gear in August

SOUTH KINGSTOWN – Economic momentum shifted into a higher gear in Rhode Island in August, a possible turning point in the state’s recovery, University of Rhode Island economist Leonard Lardaro said Monday.
August’s Current Condition index measured 75, the same as July, sustaining momentum, but more importantly, for the first time in 12 months, was higher than the index for the year prior. In August of 2013, the CCI registered 67.
The implication is “critical,” Lardaro writes: “We appear to have transitioned from a period where the current recovery was becoming less broadly based into one where economic momentum is increasing. That, as the saying goes, is a big deal!”
If that momentum is sustained in coming months, the state may start experiencing the accelerating momentum associated with the national economy, Lardaro said.
“Think of it as shifting into a higher gear,” he added, “one that could allow Rhode Island to further close the gap between its performance and that of the overall U.S. economy.”
The Current Conditions Index measures the state’s economic performance, or momentum, using 12 different metrics. A CCI indicator greater than 50 indicates economic growth, while a value below 50 suggests contraction.
While single-unit permits, a leading indicator of growth, declined by 8.6 percent in August compared with its value last year, most other indicators improved, the report states.
New claims for unemployment fell for the second consecutive month, this time by more than 20 percent, which could indicate resumption of a downward trend, he said. At the same time, employment service jobs, which includes temporary employment and is a prerequisite to job growth, rose for the second time since last November, by 2.2 percent, nearly twice the rate in July.
Other improved leading indicators include total manufacturing hours, which grew at a slower but upward rate of 1.1 percent, and U.S. Consumer Sentiment, up two tenths of a percent, ending three consecutive declines.
While the state’s unemployment rate remained one of the highest in the country at 7.7 percent in August, other rising indicators included an increase of 3.7 percent in retail sales compared with a year ago; an uptick of 1.8 percent in private service-producing employment; and a four-tenths of a percent increase in the labor force year over year.
Likewise, benefit exhaustions, which reflect longer-term unemployment, fell 12.7 percent compared with a year ago – the fourth double-digit improvement in the last five months.
Government employment remained unchanged, while the manufacturing wage declined by 4.6 percent – the sixth consecutive drop, Lardaro said.

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