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As the fourth quarter and 2013 came to an end, Rhode Island’s economic performance continued as it had for a while - we are moving forward, albeit at a not very encouraging speed. The news overall continued to be mixed: the good news was that the Current Conditions Index for December rose slightly to 75 from its November value of 67. And, within December’s performance, there were some positive results, mainly that almost all of the CCI’s leading economic indicators improved. That bodes well as we move into 2014. The bad news pertains to the continuation of a disturbing pattern: for a fifth consecutive month, and the sixth time in seven months, the CCI failed to exceed its year-earlier value. Hopefully, since the CCI values in early 2013 were not as strong as they had been in late 2012, we will soon find ourselves exceeding year-earlier values again in the first part of 2014. That is a very real possibility if the US economy continues to strengthen. We’ll just have to keep our fingers crossed. Once we begin to exceed prior-year values this will be the signal that the recovery is once again becoming more broadly based and that our momentum is accelerating. As I noted last month, the ultimate test of how robust Rhode Island’s recovery proves to be will be defined by our ability to accelerate from current and past rates of growth. We can only hope that our state’s continuing failure to meaningfully redefine itself for the information age (other than renaming the EDC) won’t pose too many obstacles.
For December, four of the CCI’s five
leading indicators improved. The other, Single-Unit Permits, barely
failed to improve, declining 1.4 percent from a year ago. While this was only
its third non-improvement in over a year, this month’s result may well be more
of a reflection of December’s weather than of any underlying economic
weakness in our state’s housing sector.
US Consumer Sentiment rose sharply (+12.9%) in December
following three consecutive months of declines. It has remained in an uptrend
that we can expect to continue as long as the stock market continues to
improve. Employment Service Jobs, which includes temporary
employment, a prerequisite to overall employment growth, rose by 2.0 percent in
December following a decline last month. While it remains in an uptrend, it
appears quite likely that its values are levelling off around 9,000, assuming
that rebenchmarking next month doesn’t change this pattern. Should
layoffs begin to rise, this will pose a number of problems to our economic
momentum as we move into 2014.
All of the remaining leading indicators
improved in December. New Claims for Unemployment Insurance, the timeliest measure of layoffs,
improved significantly in December, falling by 21.8 percent, its second
consecutive double-digit decline. While this indicator is not yet in a
well-defined downtrend, the most recent four months indicate that this may be
changing. The final leading indicator, Total Manufacturing Hours, which
measures strength in our manufacturing sector, rose by a very healthy 3.5
percent in December, driven mainly by a large increase in the length of the
workweek. This indicator has now improved for eleven of the last thirteen
months. Combined with the recent behavior of Single-Unit Permits, it is
clear that Rhode Island’s goods-producing sector is far from dead.
