Home Economy Economic Activity Lardaro: R.I.’s economy has mixed performance in October

Lardaro: R.I.’s economy has mixed performance in October

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PBN Staff

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12/17/2024

Lardaro-1-1 — RHODE ISLAND’S economy turned in a mixed economic performance in October, although some strong elements remain, University of Rhode Island economist and professor Leonard Lardaro said Tuesday in his monthly Current Conditions Index report. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – Rhode Island’s economy turned in a mixed economic performance in October, although signs of strength remain, University of Rhode Island economist and professor Leonard Lardaro said Tuesday in his monthly Current Conditions Index report. The index that Lardaro publishes each month had an expansion value of 67 in October, down from 75 in

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PROVIDENCE – Rhode Island’s economy turned in a mixed economic performance in October, although signs of strength remain, University of Rhode Island economist and professor Leonard Lardaro said Tuesday in his monthly Current Conditions Index report. The index that Lardaro publishes each month had an expansion value of 67 in October, down from 75 in both September and August. A CCI value above 50 indicates an economic expansion while a value below 50 indicates economic contraction. “It appears the growth spurt from the second quarter has ended and that we are transitioning to a more sustainable [for us] level of economic momentum,” Lardaro said. “In terms of perspective, however, it is important to keep in mind that CCI values this year have exceeded those of last year with the exception of only one month, so Rhode Island’s economy has continued to move beyond levels [of] a year ago.” Rhode Island could, however, be in the early stages of a trend where year-over-year improvement continues while month-to-month growth slows, he added. “For example, while the CCI based on yearly changes remains in the expansion range, the same is not true when it is calculated on a monthly basis,” Lardaro said. “The Monthly CCI has failed to exceed 50 for all but one of the past six months. Should this trend continue ... then eventually yearly improvement will begin to slow and possibly reverse. At this point we are far from that eventuality, but it is something to keep in mind.” Total manufacturing hours rose by 5.6% a year ago. Even though Lardaro calls this a great number, he finds this growth potentially troubling since it existed only with the nondurable goods portion (products that are used up quickly or have a lifespan of less than three years). Eight of the 12 indicators contained in the CCI improved year over year in October, Lardaro said, with the labor force being the most notable. “This month our state’s labor force rose by 2.5%, below the 3% rate where it had been since May,” Lardaro said. “However, on a monthly basis, its level has been declining for the last three months. Along with this were slight declines in the labor force participation rate over the past two months, although it remained at 65%.” “The cyclically sensitive durable goods sector saw no change in employment and declines in both hours worked and the hourly wage,” Lardaro said. “This is potentially concerning, as it is a critical part of Rhode Island’s cyclical sensitivity. Interestingly, the manufacturing wage actually fell in October [-1.5%] its first decline since January of 2020, largely the result of durable goods weakness.” Retail sales, a key indicator of Rhode Island’s economic health, rose by 2.7 % in October after its weak performance last month. Lardaro attributes the October gain to a shorter holiday shopping season. Employment service jobs grew the last two months, while new claims failed to improve in October, causing more mixed signals for the month’s data, Lardaro said. Government employment, a consistent performer, registered another increase in October. Benefit exhaustions, which reflects long-term unemployment, has now increased at double-digit rates every month since last April, rising by 11.7% in October. Private service-producing employment, which reflects nongovernment, nongoods producing employment that improved every month last year, saw its growth accelerate to 1.9% in October. U.S. consumer sentiment rose at a double-digit rate in October, while single-unit permits, or new-home construction, surged by 20.6% relative to last October, its eighth increase in nine months. Year-over-year CCI indicators in October:

Employment service jobs increased by 4.9%.

Government employment increased by 2.3%.

Labor force increased by 2.5%.

Total manufacturing hours increased by 5.6%.

Manufacturing wage decreased by 1.5%.

New unemployment claims increased by 0.4%.

Private service-producing employment increased by 1.9%.

Retail sales increased by 2.7%.

Single-unit permits increased by 20.6%.

Unemployment benefit exhaustions increased by 11.7%.

Unemployment rate increased by 1.2%.

U.S. consumer sentiment increased by 10.9%.