PROVIDENCE – The Rhode Island economy continued to see expansion for the eighth consecutive month in November, with Current Conditions Index indicators registering strong performances as recovery from the COVID-19 pandemic continues, said University of Rhode Island economist Leonard Lardaro on Thursday.
However, the state’s economic recovery will remain uneven, according to Lardaro’s CCI report that he produces each month, with a return to normalcy taking two to three years.
The CCI registered a value of 83 for November, identical to the prior two months and a significant improvement over the 25 value it registered in November 2020.
A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
Lardaro said this period of strong CCI values should last until April, a year after the current recovery began, at which time CCI values could change due to the uneven recovery.
“This is not to imply there is no underlying strength in this recovery, as several indicators have continued to turn in strong performances,” he said.
Lardaro said no matter what revised data shows, he remains confident about the direction of Rhode Island’s economy.
“We are continuing to move forward and will continue to do so, although this recovery will be uneven, requiring two to three years before we return to normal,” he said. “The big question: When the sugar high from all the federal money ends, how will Rhode Island fare since so little has been done to improve this state’s structural deficiencies?”
For November, the CCI remained at 83, with 10 of the 12 indicators showing improvement, he said. Retail sales was once again the star performer, rising by 14.8% from a year ago, its 10th consecutive double-digit increase.
Of the five leading CCI indicators, once again only three improved in November. Total manufacturing hours increased at a double-digit rate of 13%, its eighth consecutive double-digit improvement, as both the length of the workweek and employment rose.
Very large revisions to new claims continue, based on the removal of fraudulent claims, Lardaro said in the report. For this “cleaner” data, new claims, which reflect layoffs, fell by 80.9% compared with November 2020.
Employment service jobs, a leading indicator of employment, fell by a disappointing 4.4%, its second annual decline since April. Single-unit permits rose by 14.4%, its second improvement following two declines. And U.S. consumer sentiment fell sharply again, by 12.2%, its fourth straight decline.
The monthly CCI fell to its neutral value of 50, no longer in the expansion range, continuing a trend of several months of weakness. It remains well below the regular CCI value and its weak values are a harbinger of what is to come, Lardaro said.
“The regular CCI will not be able to sustain its recent high values as our momentum begins to slow,” he said. “Behind the disappointing [monthly CCI] November value was a string of declining indicators, such as U.S. consumer sentiment, total manufacturing hours, retail sales, employment service jobs and benefit exhaustions.”
Lardaro added, “What is disturbing is that three of these indicators will not be revised when rebenchmarking occurs.”
Year-over-year CCI indicator performance in November:
- Government employment increased 3.7%.
- U.S. consumer sentiment decreased 12.2%.
- Single-unit permits increased 14.4%.
- Retail sales increased 14.8%.
- Employment services jobs decreased 4.4%.
- Private service production employment increased 3.3%.
- Total manufacturing hours increased 13%.
- Manufacturing wage increased 9.7%.
- Labor force increased 2.8%.
- Benefit exhaustions declined 74.2%.
- New claims declined 80.9%.
- The unemployment rate declined 2.8 percentage points.
Cassius Shuman is a PBN staff writer. You may reach him at Shuman@PBN.com.
