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CCI Report Shows RI Economy ‘Shifting Into High Gear’

Monday, January 14, 2013

 

Rhode Island’s economy has continued its recovery with a strong showing in the month of November.

According to University of Rhode Island economist Dr. Leonard Lardaro, who releases a monthly report titled the Current Conditions Index (CCI), the Ocean State posted an official labor data score of 75 and a CCI score of 83 for November.

This is identical to how the state performed in October, the best month Rhode Island had seen since the beginning of 2011.

“This back-to-back strength provides a critical piece of evidence supporting the hypothesis that October’s strong performance was not a ‘one month wonder,’” Lardaro said. “What we appear to be witnessing is a trend of more broadly based economic activity that has generated increased economic momentum. It thus appears that Rhode Island’s economy has now shifted into a higher gear."

The Current Conditions Index is meant to be viewed as an indicator of an economy’s current momentum. Its values, Lardaro said, “reflect how broadly based economic activity is … and the resulting underlying momentum.”

While November’s report is encouraging from a recovery standpoint, Lardaro was quick to caution that the report says nothing about current levels, and the state is not out of the woods quite yet.

“This is where things get a bit discouraging: while Rhode Island’s economy is improving, the levels of key variables like payroll employment remain far below the values they attained at the height of the last recovery,” he said, noting that RI’s employment peak occurred in December of 2006. “We still remain about six percent below our employment peak.”

The CCI analyzes the state’s economy based on 12 vital indicators, nine of which improved in November. In fact, for only the second time since the end of 2010, the state saw an increase in its labor force during the period.

Compared to last year, retail sales in the state grew 6 percent, increasing for the 11th time in 13 months.

“Benefit Exhaustions, reflective of longer-term unemployment, also fell at a double-digit rate (-12.3%), sustaining its downward (improvement) trend,” he said.

Other positive markers included new home construction which, based on single-unit permits, rose by 3 percent during the month, and a 1.8 percent increase in manufacturing hours.

The only negative, Lardaro noted, was in the category of layoffs as new claims for unemployment insurance rose by 1.6 percent.

“The Current Conditions Index has shown what appears to be a substantial uptick in the pace of economic activity here,” Lardaro said, noting he believes the state is improving faster than official labor data indicate. “This is certainly welcome news.”

Lardaro says the results should provide Rhode Island some “margin for error in dealing with whatever Washington sends our way in 2013.”
 

 

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