Lardaro: R.I. economy ‘stuck in neutral’

RHODE ISLAND'S CURRENT Conditions Index June fell back to a contraction value of 42 in June, as only five of the 12 indicators that comprise the CCI improved over the year, according to economist Leonard Lardaro, of the University of Rhode Island. / COURTESY LEONARD LARDARO
RHODE ISLAND'S CURRENT Conditions Index June fell back to a contraction value of 42 in June, as only five of the 12 indicators that comprise the CCI improved over the year, according to economist Leonard Lardaro, of the University of Rhode Island. / COURTESY LEONARD LARDARO

PROVIDENCE – The state’s economy was “stuck in neutral” in the second quarter, according to Leonard Lardaro, a University of Rhode Island economist.
Lardaro, in his Current Conditions Index released Monday, said Rhode Island’s first-quarter performance was “fair at best,” but in the second quarter, “things got decidedly worse.”
He said the CCI in June fell back to a contraction value of 42 – CCI measurements higher than 50 suggest economic growth, while a value below 50 indicates contraction. June’s performance is lower than May’s value of 50 and June 2015’s 67.
Only five of the 12 indicators that comprise the CCI improved over the year, leading to the lower value.

They were: private service-producing employment, a 1.1 percent increase, resuming its upward trend; total manufacturing hours, a 1.5 percent increase; manufacturing wage, a 5.2 percent increase; and benefit exhaustions, which reflects longer-term unemployment fell 30.5 percent, “its best rate of improvement in quite a while,” and unemployment rate, a decline of 0.5 percent.
Lardaro said payroll employment saw its largest monthly increase in some time at 1,700 higher than May and 3,600 more than June 2015.
“Like the nation, Rhode Island experienced a healthy jump in June employment,” Lardaro wrote in the report.

But Lardaro said the labor force continued to decrease year over year, falling 0.5 percent, its 25th such decline.
“As a result, although its monthly performance was acceptable, Rhode Island’s unemployment rate is still falling for the wrong reasons,” Lardaro said.

In addition to labor force, the other six remaining sectors, government employment, U.S. consumer sentiment, single-unit permits, retail sales, employment services jobs and new claims, all performed negatively over the year in June.

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Employment service jobs, which includes temporary employment and which Lardaro described as a “prerequisite to employment growth,” fell by a “hefty” 3.7 percent, its fourth consecutive decline. New claims, which he described as a “leading labor market indicator that reflects layoffs,” rose 4.1 percent, and single-unit permits fell sharply by 26.6 percent, following a rise of 17.7 percent a year ago.
“The second quarter was not a good one for Rhode Island … While there are and have been some bright spots throughout this year, especially June’s payroll employment, it is not clear at this point whether we will ultimately be able to sustain more broadly based momentum. It appears that the national economy has begun to improve. That single factor will largely determine our fate,” Lardaro said.

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