Lardaro: R.I. economy at standstill in October

THE LATEST CURRENT CONDITIONS Index for October showed that economic momentum came to a standstill, according to URI economist Leonard Lardaro. / COURTESY LEONARD LARDARO
THE LATEST CURRENT CONDITIONS Index for October showed that economic momentum came to a standstill, according to URI economist Leonard Lardaro. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – Economic momentum that had been building in the third quarter came to an apparent standstill in October, according to the latest Current Conditions Index, University of Rhode Island economist Leonard Lardaro said Monday.
October’s Current Condition Index, which measures the state’s economic performance, or momentum, using 12 different metrics, measured 58, down year over year and below a consistent measurement of 75 for the three months prior, the report shows.
A CCI indicator greater than 50 suggests economic growth, while a value below 50 indicates contraction.
Up until now, the trend in data seemed to indicate economic momentum in Rhode Island was becoming “more broadly based” and beginning to mirror national improvements, Lardaro said last month. But in this month’s report, that development is “on hold, at least statistically,” Lardaro noted.
When trying to account for the situation, Lardaro attributes the turnaround in fortunes to a statistical aberration, if not an outright mistake in the decline in October in payroll employment data. After three consecutive increases, the indicator for employment service jobs dropped on a year over year by nine-tenths of a percentage point. It declined from September to October as well, he said.
With apparent inaccurate data from the U.S. Bureau of Labor Statistics “you get ‘mystery declines.’”
If the employment service jobs statistic, which measures the amount of service jobs that are added or lost, had not declined, the CCI would have measured 67 instead of 58 – still below the October of 2013 figure of 75 but clearly stronger in value than the measure that did result, he said.
“Even if I’m right that employment services should have improved, that gives us a 67 so we’re still below the value of last October a year ago – but not that much,” he told Providence Business News. “We’re below [last year’s value] either way, so we’re not doing quite the acceleration I’d hoped for. While we’re clearly in a recovery, the momentum is not as clearly based as I was hoping.”
Other indicators that failed to improve included total manufacturing hours, which fell by eight-tenths of a percentage point; the manufacturing wage, down by 5.5 percent; and single-unit permits, a measure of housing sector strength, down by 6.5 percent.
Despite these weaknesses, several indicators improved, the report found.
New claims, an indicator of unemployment claims, fell by 6.6 percent, improving for the seventh time in eight months and the report’s “brightest spot,” Lardaro wrote. U.S. consumer sentiment rose by 18.5 percent; retail sales rose by 6.7 percent; private sector-producing employment rose 1.1 percent, and benefit exhaustions fell by 14.5 percent.
Labor force also rose slightly, by six-tenths of a percentage point year over year, he said, and the unemployment rate fell to 7.4 percent, but remains the third highest in the country.
“The biggest opportunity to gain momentum is because the national economy is accelerating, so we should be doing better,” Lardaro said, “but we’ve done virtually nothing to reinvent ourselves structurally so it’s not surprising that we have not picked up consistently with what’s happening at the national level.”

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