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Just when it appeared that Rhode Island’s
economy was beginning to re-accelerate, bringing back memories of late 2012,
along comes June’s data that abruptly shatters that notion and then some. The
June Current Conditions Index value fell all the way back to its neutral value
of 50, as only six of the twelve CCI indicators improved. Worse yet, April’s
value that had been 58 has been revised down to 50 as well. Not exactly life in
the fast lane!
To say that Rhode Island’s overall
performance in 2014 has been somewhat disappointing has now become an
understatement. Not only did we never get the post-winter bounce we were hoping
for, even the good-weather months are proving to be very disappointing. What I
find perplexing about Rhode Island’s most recent performance is that in spite
of an improving national economy, we continue to flounder.
Perhaps the most pressing issue now is
whether Rhode Island has begun to decouple from the accelerating national
economy.
Apparently, Rhode Island’s negatives are finally catching up to its positives,
increasingly diminishing overall momentum. This is part of the reason why Rhode
Island has been unable to reduce its Unemployment Rate to a level that
would end its prolonged stretch as the state with the highest jobless rate.
Think about this for a moment - not only does Rhode Island lag in terms of its
relative performance, if recent trends continue, it will begin to lag in terms
of its absolute performance as well. I now characterize Rhode Island’s
performance as moving from precarious to tenuous, with June marking the
eleventh consecutive month where the CCI has failed to beat its year-earlier
value.
For June, only two of the five leading
indicators contained within the Current Conditions Index improved, although
both did so at healthy rates. Single-Unit Permits, which reflect new
home construction, turned in yet another strong performance in June, rising by
23.7 percent relative to last June. Total Manufacturing Hours, which
measures strength in our manufacturing sector, rose sharply again in June
(+4.3%), as both the length of the workweek rose and manufacturing employment
increased. Oddly, in spite of this continuing manufacturing momentum, the Manufacturing
Wage actually declined for a fourth consecutive time in June, by 2.3
percent.
US Consumer Sentiment fell for the second consecutive month
(-1.6%) following a string of five consecutive increases. Employment Service
Jobs, which includes temporary employment, and is a prerequisite to
employment growth, declined sharply in June, by 4.1 percent, its seventh
consecutive decline. I continue to view changes in this indicator somewhat
suspiciously. The biggest surprises for June, which contributed a great deal to
the CCI’s neutral value of 50, were increases in both New Claims for
Unemployment Insurance, the timeliest measure of layoffs, and Benefit
Exhaustions, which reflects longer-term unemployment. Of these, New
Claims, which is a leading indicator, rose at an alarming rate, 21.8
percent relative to last June. It is not clear whether the recent improvements
in this indicator will prove to be sustainable. Benefit Exhaustions increased
by 10 percent relative to a year ago, following two consecutive months of
double-digit improvement.
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