KINGSTON – “Based on the Current Conditions Index for April, Rhode Island’s economy is slowing,” University of Rhode Island economist Leonard Lardaro said today in his monthly report.
“For April, economic momentum here clearly diminished, as the Current Conditions Index fell from its neutral value of 50 in March to 42 in April,” Lardaro said. (Scores higher 50 points indicate the state’s economy is growing while lower scores indicate it is shrinking.) “And, unlike March, which can be classified as a mixed performance, April was a very weak month.”
Improvement was seen in only five of the CCI’s 12 indicators, led by employment service jobs; single-unit building permits; and the state’s unemployment rate.
But Lardaro saw a dark side to even these “three bright spots”:
• Service jobs grew at 4.9 percent in April, “very good historically,” but “well below the double-digit rates of growth we have witnessed since October of 2006,” he said. “As this is a leading economic indicator, its April performance may be pointing to weaker job growth ahead.”
• Permits grew by 15.1 percent compared to April 2006, but most of that growth was due to last April being “an extremely weak month,” he said.
• “And, while the unemployment rate dropped from 5.2 percent last April to 4.5 percent this April, this significant decline was tainted by a declining labor force.” The state’s resident labor force shrank by 0.4 percent, in its first year-over-year decline since December 2004.
Also improving in April were private service producing employment, which increased 1.3 percent – “consistent with a slowing of overall employment growth,” Lardaro said – and the average manufacturing wage, which increased 1.2 percent in April after remaining essentially flat in March.
Losing ground in April, apart from the state’s resident labor force, were new claims for unemployment, rising 8.7 percent; benefit exhaustions, a measure of long-term unemployment, rising 6.7 percent; retail sales, declining 6.7 percent; total manufacturing hours in the state, down 1.0 percent; government employment, down 0.6 percent; and the national Consumer Sentiment index, declining 0.1 percent.
In Rhode Island as nationally, Lardaro said, the retail sales decline “can be partly explained by a ‘calendar effect,’” caused by the early Easter. Rising gasoline prices also “were clearly part of the reason for April’s decline.”
Still, he wrote, “Rhode Island’s economic performance over the past two months is not very encouraging.
“Our slowing rate of growth is understandable in light of the diminished pace of national economic activity. But, unlike the nation, Rhode Island does not have as much of a margin for error, as our upcoming [state] deficits will negatively impact whatever momentum we can attain.”
The bottom line, Lardaro said, is “not very encouraging.”
The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economic climate; values above 50 indicate the economy is expanding. Additional information, including historic data, is available at members.cox.net/lardaro/current.
