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The new year began with some happy news concerning Rhode Island employment: payroll employment was revised higher by 3,100 relative to the original estimate. But this is Rhode Island, where behind every silver lining lurks a gray cloud: our jobless rate, which was already either the highest or among the highest in the country, was also revised - even higher. So, there is some cause for celebration in the rebenchmarked payroll data, but the household survey data continues to paint a very discouraging picture as far as how this recovery is progressing.
How did Rhode Island’s cyclical economic momentum fare in light of the revised data? The Current Conditions Index, which was designed for this very purpose, also showed a continuation of the good news - bad news situation we have remained mired in for some time now. First, the good news: in light of the newly released labor market data, the CCI was revised higher for four months in 2013 (April, June, September, and November). And, for January, the CCI rose from the (downwardly revised) December value of 58 to 75, as nine of twelve indicators improved. Now for the bad news: the CCI was only revised lower for two months in 2013 (May and December), but the CCI values based on the new data show that the CCI has now failed to improve relative to its year-earlier value for six consecutive months and seven of the last eight months. So, while the values of several CCI indicators were revised higher, these upward revisions were not sufficient to permit us to exceed the favorable CCI values we experienced at the end of 2012 and into January of 2013. It should be noted though, that there were several ties (like this month).
For January, two of the CCI’s five leading
indicators failed to improve. The first of these, Employment Service Jobs,
includes temporary employment, which is a prerequisite to employment growth. It
fell by 2.4 percent in January, which was its second consecutive decline.
Continuation of its recent uptrend is now questionable as its values have
apparently plateaued around 9,000 for the better part of a year. The other
indicator, New Claims for Unemployment Insurance, the timeliest measure
of layoffs, rose by 1.3 percent in January, its first failure to improve since
last August. The downtrend in this indictor since July of 2013 may be ending.
It will be necessary to observe its behavior over the next several months
before any confirmation is possible, however.
Single-Unit Permits managed to improve by 5.5 percent in
January relative to its value one year ago, although weather-related factors
make interpreting changes in this indicator very difficult. In spite of this,
it is safe to conclude that Rhode Island is continuing to move beyond its
cyclical trough in new home construction. US Consumer Sentiment rose at
a double-digit rate in January (+10.1%), its second increase following three
consecutive months of declines. Expect its uptrend to continue as long as the
stock market improves. The final leading indicator, Total Manufacturing
Hours, which measures strength in our manufacturing sector, barely rose in
January (+0.2%), as a decline in the
workweek almost offset the job gains that occurred. At least part of the
decline in hours may be weather related.
