‘R.I.’s abysmal year continued in September’

KINGSTON – “Rhode Island’s abysmal year continued in September,” although the state’s economy did edge up from its “nightmare” low the month before, according to University of Rhode Island economist Leonard Lardaro.
His Current Conditions Index (CCI) for the Ocean State – based on 12 state and national economic indicators – rose to 8 points in September from the absolute low of 0 points recorded this August (READ MORE) and June, Lardaro said in his monthly report today. (The index has a maximum of 100 points. Its neutral value is 50 points; higher scores indicate the Rhode Island economy is expanding while lower values indicate contraction.)
“Perhaps the only good news for September was that the CCI wasn’t 0,” the economist wrote. His CCI has hovered at 8 points for much of this year; its highest level so far this year was the 17 points it registered in April.
Among indicators, the mood of consumers nationwide – measured by the University of Michigan Consumer Sentiment Index – fell 15.8 percent compared with a year ago. Retail sales fell 0.4 percent year over year– “ironically, its ‘best’ rate of decline since April,” Lardaro said.
“Our goods-producing sector remains hobbled, as both housing and manufacturing continue to contract,” he added. September’s increase in the CCI “was determined by improvement in a single indicator, the manufacturing wage,” which rose 0.5 percent compared with September 2007, he said. But that “good news … was easily eclipsed by a 7.3-percent decline in total manufacturing hours,” as companies cut back on both the number of workers and the length of the average work week.
Single-unit housing permits – a leading indicator for residential construction – fell 39.5 percent year over year, with only 70 permits being issued statewide this September.
Meanwhile, “payroll employment continued its long decline that began in January of 2007, causing private service-producing employment to fall by 2.1 percent” compared with September 2007, Lardaro wrote.
Employment services jobs – a leading indicator for the labor market that includes temporary help – fell 15.5 percent in that indicator’s “eighth consecutive double-digit decline,” he said. And government employment fell 2.0 percent compared with a year ago.
New unemployment claims rose 27.7 percent from their September 2007 level. Unemployment benefit exhaustions – a measure of long-term joblessness – “surged by 50 percent compared with a year ago, although this was partly related to presence of extended benefits,” Lardaro wrote. And the state’s labor force shrank 0.8 percent compared with September 2007.
“Rhode Island’s horrific economic performance has not gone unnoticed nationally,” Lardaro added.
The state’s September unemployment rate of 8.8 percent (READ MORE) “led the nation, beating even Michigan,” he said. And, “it isn’t finished rising. Don’t be surprised if we see Rhode Island’s jobless rate rise all the way to 9.5 percent in the next six to nine months.”
The bottom line, Lardaro wrote, is that “September continued what is becoming the weakest annual economic performance for this state since I began charting it.”
The nationwide jobless rate last month surged to a 14-year high of 6.5 percent, the U.S. Department of Labor’s Bureau of Labor Statistics reported on Friday. (READ MORE)
That news came a day after the release of preliminary data showing that U.S. unemployment rolls reached a 25-year high in the week ended Nov. 1 But the Thursday report also hinted at better news for the Ocean State: In the week ended Oct. 18, for the second week in a row, the state was not among the Top 10 nationwide for new jobless claims, the government said. (READ MORE)
Going forward, Lardaro predicted, the state’s economy will weaken even faster, “based on further weakening of both the national and global economies.” Therefore, “as bad as Rhode Island’s economic performance has been thus far in 2008, September very likely marks yet another inflection point, where growth begins to decline at an even faster pace.”
The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economic climate. The index – based on 12 key economic indicators related to housing, retail sales, the employment situation and the labor supply – attained its maximum value of 100 points several times in 1984 and 1986. Additional information, including historical data back through 1980, is available at members.cox.net/lardaro/current.