University of Rhode Island economist Leonard Lardaro said last week that the Current Conditions Index for April shows the state’s economy is slowing.
Lardaro said in his monthly report that the state’s index fell from its neutral value of 50 in March to 42 in April. (Scores higher 50 points indicate the state’s economy is growing while lower scores indicate it is shrinking.)
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“Unlike March, which can be classified as a mixed performance, April was a very weak month,” he wrote.
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.”
• Building permits increased 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.
• While the unemployment rate dropped from 5.2 percent last April to 4.5 percent this April, the decline was tainted by a declining labor force, Lardaro said. The state’s resident labor force shrank by 0.4 percent, in its first year-over-year decline since December 2004.
Also improved in April was private service-producing employment, which increased 1.3 percent – “consistent with a slowing of overall employment growth,” Lardaro said.
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.
As is the case nationally, Lardaro said, Rhode Island saw declines in retail sales that “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.”
“Our slowing rate of growth is understandable in light of the diminished pace of national economic activity,” Lardaro wrote. “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.”
