Lardaro: R.I. economy improves in July, calls it a ‘pleasant surprise’

THE CURRENT CONDITIONS INDEX for July showed that seven of its 12 indicators improved compared with only five in June. / COURTESY LEONARD LARDARO
THE CURRENT CONDITIONS INDEX for July showed that seven of its 12 indicators improved compared with only five in June. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – July was a “pleasant surprise” as economic growth measured by University of Rhode Island economist Leonard Lardaro’s current conditions index jumped 16 percentage points from June.

Released Monday, the CCI reported the positive opening of the third quarter locally, but the remainder of Q3 “will be determined almost exclusively by national economic momentum,” said Lardaro.

In July, the CCI grew to 58 – CCI measurements higher than 50 suggest economic growth, a value below 50 indicates contraction. Evidence for this increase is apparent from the improvement seen in seven of 12 indicators in July, whereas only five indicators saw improvement in June. July 2016’s CCI measurement also is equal to that of a year ago.

In July, the state’s unemployment rate fell 0.4 percent and new claims, which reflect layoffs, fell 18.4 percent.

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Government employment (a 0.5 percent increase) and new claims were the two indicators to see improvement in July and not in June. However, Lardaro warned an economic bounce back cannot be sustained by these two indicators alone.

In addition, a 1.1 percent improvement was measured in private service-producing employment. Total manufacturing hours saw a 0.4 percent increase while the manufacturing wage rose 3.9 percent.

Benefit exhaustions, which analyzes longer term unemployment had its slowest increase “in a very long time,” falling 0.5 percent, said Lardaro.

However, U.S. consumer sentiment fell by 3.6 percent in July, its seventh fall in eight months, and July marked the 26th year-over-year labor force decline at 0.1 percent.

July also saw negative momentum in single-unit permits, which fell by 10.3 percent; employment services jobs, which includes temporary employment and is a prerequisite to employment growth, dipped by 6.1 percent; on top of a 1.9 percent decrease in retail sales.

Lardaro qualified the second quarter as “disappointing,” and said in light of July’s 16-point-jump it is “premature to begin celebrating and to assume that the prior weakness we experienced is definitely behind us.”

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