PROVIDENCE – Parts of Rhode Island’s economy are moving in the right direction, but signs of hope continue to be blunted by ongoing issues, according to University of Rhode Island economist Leonard Lardaro.
“On a yearly basis, things here continue to look bleak,” wrote Lardaro in his monthly Current Conditions Index report for August, which was published on Monday.
The CCI for August was 25, which is a dip of 42 from August of 2019, but is the same score of that in both July and June of this year. Only three out of the 12 CCI indicators improved year over year in August, including single-unit permits, retail sales and manufacturing wages.
A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
“Several key indicators remain far below where they were only six or seven months ago,” wrote Lardaro. “Gauging this is made all the more complicated by an exceptionally large amount of ‘noise’ in the labor market’s survey-based data.”
Lardaro said in the CCI report that he had heard someone from the R.I. Department of Labor and Training recently attribute the unfavorable indicator values, including the high unemployment rate, to the small sample used to calculate it. He said that this person, who he did not identify, “never complained” about the same sample size when the unemployment rate was “artificially reduced” to around 3.4% based on a decade-long labor force decline.
“It is not a sample size that is causing these recent problems,” said Lardaro. “Some combination of extreme noise in the data along with seasonal adjustment difficulties and the lack of data smoothing by the federal government is the cause of the ‘odd’ values we are observing.”
“We are now in the midst of a period where tracking the labor market is essentially ‘follow the bouncing indicator,’ at least for survey-based data only.”
Lardaro said there is “little to cheer about” in August’s data in terms of yearly comparisons. However, monthly changes performed better once again, with seven of the 12 indicators improving. These repairing indicators included government employment, U.S. consumer sentiment, single-unit permits, employment services jobs, private service-production employment, total manufacturing hours as well as manufacturing wages.
“Month-over-month changes, if sustained, eventually translate into yearly improvement,” wrote Lardaro. “We will soon begin to see how long these improvements are able to continue in light of the sizeable number of challenges we will be facing.”
Year-over-year changes in Rhode Island’s CCI indicators:
- Government employment declined 1.2%
- U.S. consumer sentiment declined 17.4%
- Single-unit permits increased 32.7%
- Retail sales increased 3.1%
- Employment services jobs declined 31.2%
- Private service-production employment declined 8.8%
- Total manufacturing hours declined 3.9%
- The manufacturing wage increased 3.8%
- The labor force decreased 2.6%
- Benefit exhaustions increased 880%
- New claims increased 545%
- The unemployment rate increased 9.3 percentage points
Alexa Gagosz is a PBN staff writer. Contact her at Gagosz@PBN.com. You may also follow her on Twitter at @AlexaGagosz.
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