R.I. economy strengthening, index shows

PROVIDENCE – An index of leading economic indicators for Rhode Island improved for the eighth consecutive month in December.

The Providence Business News/e-forecasting.com index increased 2.2 percent in December to 105.3 after a 1.7 percent increase in November. A reading of 100 is equal to the state’s economic activity in 2000.

The indicators are “continuing to show strong growth,” Maria E. Simos, e-forecasting.com’s chief executive officer, said of the eight-month upward trend. However, the index’s current level is significantly lower than where it stood in the middle of the last decade.

Last September marked the first time the index hit 100 since January 2009, and in December the index reached its highest level since September 2008, the month Lehman Brothers Holdings Inc.’s bankruptcy set off a panic in the financial markets.

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Rhode Island’s economy fell into recession in June 2007, according to e-forecasting’s estimates. The state starting losing jobs four months before that, according to the U.S. Labor Department.

In another positive sign, the index forecast that the state’s economy will grow 13.6 percent on an annual basis over the next six months.

That was up from the growth projections of 9.1 percent in November and 5.2 percent in October. Before last September, the index had projected the state’s economy shrinking for 25 straight months, bottoming at a forecast of negative 18.8 percent in March.

The leading indicators index uses nine published statistics to forecast the direction of the state’s economy over the next three to six months, with positive numbers signaling growth and negative numbers signaling contraction.

All nine factors used to calculate the index improved in December, including month-over-month rises in new building permits and manufacturing exports and month-over-month declines in claims for unemployment benefits.

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