Lardaro: Acceleration of R.I. economy quickens

RHODE ISLAND'S economy expanded for the 17th consecutive month in August, accelerating the pace of activity based on the Current Conditions Index, University of Rhode Island economist and professor Leonard Lardaro said Monday. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – The pace of Rhode Island’s economic recovery has picked up speed, expanding for the 17th consecutive month in August, University of Rhode Island economist and professor Leonard Lardaro said Monday.  

“Rhode Island… has clearly moved well beyond its pandemic decline,” he said. 

In his monthly report, Lardaro said 11 of the 12 economic indicators in his Current Conditions Index improved in August year over year. Most notable are the number of employment service jobs, a “key leading indicator” which rose for the second straight month and show signs the industry’s downtrend may be close to ending.  

Service jobs rose for a second time after having fallen for six consecutive months, its August improvement reflecting a “substantial” 4.75% growth rate from the prior year, up from 1.6% in the July report. 

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“Should this uptrend be sustained, it would strongly suggest a … trend of rising employment,” said Lardaro.  

The CCI report Lardaro produces monthly had a year-over-year value of 92 in August. A CCI value above 50 indicates expansion, while a value below 50 indicates contraction. 

Lardaro said retail sales and manufacturing continue to lead the recovery. Total manufacturing hours rose 6.1%, while manufacturing wages climbed 5%. 

Retail sales growth accelerated in August by 8.7% “and has improved on a yearly basis every month since May of 2020, virtually the entire span of the pandemic,” Lardaro said. “Retail and manufacturing strength are continuing to propel Rhode Island through this recovery.” 

Another highlight Lardaro pointed to was applications for single-unit permits for new home construction, which despite rising mortgage rates and monetary tightening, climbed for the first time since November 2021. 

U.S. consumer sentiment, which has failed to improve for 13 consecutive months, declined by 17.1% in August. However, this percentage was an improvement from July’s report, which showed a 36.4% decline. 

Two labor supply measures that improved in August were benefit exhaustions, which fell by 65.4%, the continuation of a trend that began in May 2021, and new unemployment claims. The latter declined by 35% and have decreased at a double-digit rate since July 2021,

Rhode Island’s labor force, which had been down trending since March, rose in August. But while the labor force participation rate increased slightly to 63.7%, it remains well below peak 2007 levels. 

Looking ahead, Lardaro said in his report that macroeconomic trends should be closely monitored. 

“The biggest risk ahead continues to be the extent to which Rhode Island’s economy slows due to monetary tightening in the coming months,” he said. 

Year-over-year CCI indicator performance in August: 

  • Government employment increased 0.3% 
  • U.S. consumer sentiment declined 17.1% 
  • Single-unit permits rose 0.2% 
  • Retail sales rose 8.7% 
  • Employment-services jobs increased 4.7% 
  • Private-services production employment rose 3.5% 
  • Total manufacturing hours increased 6.1% 
  • The state’s manufacturing wage rose 5% 
  • The state labor force rose 0.1%. 

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