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The rugged winter weather that continued
into February clearly took its toll on Rhode Island’s overall economic
performance, although there were still a number of areas where Rhode Island
did well. The most obvious tragedy of the weather was new home construction,
which was almost nonexistent in February. Yet at the same time, both Retail
Sales and US Consumer Sentiment turned in very strong performances.
The Current Conditions Index for February was 58, a decline from its
(downwardly revised) value in January of 67, and below the February 2013 value,
which was also 67. However, I have scored the CCI for February with an asterisk
— guilty with an explanation: were it not for the recorded plunge in Single-Unit
Permits (to 26 units for the entire state), the value of the CCI would likely
have been 67, matching its values for last month and one year ago.
Yet even if that change had occurred, the
CCI still would have failed to improve relative to its year-earlier value for a
seventh consecutive month and eighth time in the last nine months. Clearly,
these “misses” are not all, nor mostly, attributable to the weather over the
past several months, so some slowing of our state’s overall cyclical momentum
is continuing. The upside to this, if there is one, is that payroll employment
has been rising substantially more than we were led to believe with the data
prior to the most recent rebenchmarking, and we just received word that
December’s employment number will be revised even higher. I guess this is Rhode
Island’s version of life in the fast lane!
For February, two of the CCI’s five leading
indicators improved, while two failed to improve, and the fifth was highly
weather distorted. Looking first at those that failed to improve, Employment
Service Jobs, which includes temporary employment and is a prerequisite to
employment growth, fell by 1.3 percent in February, its third consecutive
decline. However, based on the recent contradictory rebenchmarking changes to
this indicator, the only thing I feel confident in concluding is that this
indicator either increased, decreased, or remained unchanged in February. The
other leading indicator that failed to improve, New Claims for
Unemployment Insurance, is the timeliest measure of layoffs. For February, it
rose by 11.5 percent compared to a year ago, its second failure to improve
since last August. The downtrend in this indictor since July of 2013 may well
have ended, which would be particularly bad news for our state. Finally,
Single-Unit Permits, which was highly distorted by the weather, fell by 57.1 percent
relative to a year ago. In spite of this, Rhode Island is continuing to move
beyond its cyclical trough in new home construction.
US Consumer Sentiment rose by 5.2 percent in February, its third increase following three consecutive months of declines. The final leading indicator, Total Manufacturing Hours, which measures strength in our manufacturing sector, resumed strong growth in February (+3.0%), boosted by increases in both the workweek and employment.
