SOUTH KINGSTOWN – A “well-defined and broadly based acceleration in the pace of economic activity” in Rhode Island continued in March, according to University of Rhode Island economist Leonard Lardaro, thanks partly to gains in new-home construction and manufacturing.
“What a difference a year makes,” Lardaro said on Monday in the release of his monthly Current Conditions Index, which reached 92 for March, with 11 of the 12 indicators improving year over year. The last time the CCI reached 92 was in December 2012.
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The index for March 2016 was 58. A CCI reading greater than 50 suggests economic growth and a value less than 50 indicates contraction.
The first three months of 2017 have all outperformed their corresponding months in the first quarter of 2016.
“Both portions of our goods-producing sector, new-home construction and manufacturing … are finally working together, on a consistent basis, to generate a meaningful foundation for our state’s recent momentum,” Lardaro explained. He noted it was “precipitous declines in both of these sectors that were at the heart of the shocking decline in our state’s economic activity during its last recession.”
Total manufacturing hours, a proxy for manufacturing output, rose 2.5 percent in March, compared to the same month last year.
Single-unit permits, which reflect new-home construction, also rose sharply, by 16.7 percent.
U.S. consumer sentiment also improved, with a gain of 6.6 percent, its fifth-consecutive increase.
New claims, the timeliest measure of layoffs, barely fell in March, by 0.7 percent, marking its seventh improvement in the last eight months.
Lardaro said the sole leading indicator that failed to improve, employment service jobs (a 4.2 percent decline), includes temporary employment and is a leading indicator of future employment. It has failed to show improvement for a year.
“It continues to be the greatest disappointment among all revised indicators,” Lardaro said. “Its continuing deterioration suggests the potential for weakening future employment growth.
Lardaro also noted that the year-over-year performance of Rhode Island’s labor force, “which I continue to view as a train wreck,” improved by 0.3 percent for March – the first year-over-year gain since April 2014.
The year’s economic gains raise hopes that state revenue growth may follow, according to Lardaro.
“We might well be witnessing an inflection point in our growth rate, so that revenue growth will pick up a bit,” he said.
