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Rhode Island’s economy bounced back a bit
from its earlier-year woes in May. Following a string of three consecutive 58
values, the Current Conditions Index rose to 67 in May, matching its January
value. While Rhode Island’s overall performance in 2014 has been somewhat
disappointing, perhaps the May bounce will turn out to be the beginning of a
prolonged period of stronger economic activity driven in large part by an
improving national economy. Clearly, there have been a number of positives
during the first part of this year, most notably improvements in both payroll
and resident employment, and along with the latter, a full percentage point
decline in our state’s Unemployment Rate. Yet in spite of this good
news, Rhode Island’s performance continues to lag in terms of several metrics,
the most obvious being the #1 national ranking of our state’s jobless rate that
has been sustained for far too long a period. So, while our state’s absolute
economic performance continues to improve, its relative performance
remains problematic. Sadly, this trend hardly something new. I will continue to
describe the overall economic performance of Rhode Island’s economy as
precarious, citing the fact that May was the tenth consecutive month where the
CCI failed to improve relative to its year-earlier value.
For May, only three of the five leading
indicators contained within the Current Conditions Index improved, but two of
those did so at healthy rates. Fortunately, the two that failed to improve do
not necessarily signal any real weakness in our state’s economy or the
possibility of a transition to slower growth. US Consumer Sentiment fell
by 3.1 percent in May, ending a string of five consecutive increases. This
decline very likely reflected stock market performance that has since reversed.
Employment Service Jobs, which includes temporary employment, and is a
prerequisite to employment growth, fell by another 1.1 percent in May, its
sixth consecutive decline. Suffice it to say that I continue to view changes in
this indicator somewhat suspiciously.
Single-Unit Permits, which reflect new home construction, and
was adversely impacted by winter weather earlier in the year, turned in a
strong performance in May, rising by 9 percent relative to last May. Total
Manufacturing Hours, which measures strength in our manufacturing sector,
rose sharply again in May (+3.1%), as both the length of the workweek rose and
manufacturing employment increased by 900. Oddly, in spite of this
manufacturing momentum, the Manufacturing Wage actually declined for a
third time in May, by 2.3 percent. New Claims for Unemployment
Insurance, the timeliest measure of layoffs, declined, albeit slowly in May,
for a third consecutive month and sixth time in the last seven months. In spite
of its recent improvements, it is not yet clear whether this indicator has
resumed the longer-term downtrend that will be critical to our sustaining May’s
overall momentum in the coming months.
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