Lardaro: Economic momentum disappoints in April

THE CURRENT CONDITIONS Index  measured 58 in April, falling from 67 in March, according to Leonard Lardaro, a University of Rhode Island economist. / COURTESY LEONARD LARDARO
THE CURRENT CONDITIONS Index measured 58 in April, falling from 67 in March, according to Leonard Lardaro, a University of Rhode Island economist. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – Rhode Island’s economic performance lagged in April, and has been “disappointing” so far in 2015, according to Leonard Lardaro, an economist with the University of Rhode Island.
Lardaro did express hope for the future, however, noting that Gov. Gina M. Raimondo has included investment-oriented spending measures in her proposed budget.
“These programs, when passed, will entail lags until their major effects are felt, so look for relief to appear toward the end of the year,” he said in a statement.
Lardaro, who released his Current Conditions Index Monday, said it fell in April to 58 from March’s value of 67. Lardaro expressed disappointment that, with the exception of March, the state has failed to improve its economic performance each month.
“To put things here into a rather depressing perspective, Rhode Island’s economy has failed to demonstrate the ability to consistently exceed its performance in the prior year,” Lardaro said.
“According to recently released data, we find ourselves unable to match or exceed a year for which the Rhode Island economy grew at a 1.2 percent rate, which was itself a noticeable decline from our 2013 growth rate of 1.9 percent,” he continued.
January and February also registered 58 on the index. In 2014, January and February registered 67, while March was 58, and April, also 58.
The index measures economic momentum using 12 key indicators; indices higher than 50 suggest economic growth, while a value below 50 reflects contraction.
Lardaro said only seven of the indicators improved relative to their values last April: U.S. consumer sentiment, retail sales, employment services jobs, private service-producing employment, benefit exhaustions, new claims and unemployment rate.

U.S. consumer sentiment rose at a double-digit rate – 14 percent – for the seventh consecutive month, while employment services jobs, which includes temporary employment, improved by 3.6 percent, its second consecutive improvement. Retail sales had an “exceptional performance” in April, growing 10.7 percent; retail sales have risen for 15 of the last 16 months. Private service-producing employment rose 1.2 percent, but was weaker than its March growth.

Also, new claims, which Lardaro referred to as a “leading labor market indicator,” dropped 13.1 percent in April, sustaining a downward trend. Benefit exhaustions, which reflects longer-term unemployment, decreased by 32.8 percent year over year. Another positive: the unemployment rate also fell to 6.1 percent in April, two-tenths of a percentage point lower than it was in March.

Calling this a “volatile indicator,” he said new home construction failed to improve, as single-unit permits fell 5.8 percent.

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Government employment also failed to improve in April, falling two-tenths of a percentage point. And the manufacturing wage declined for the 14th consecutive time, dropping 4.2 percent. In addition, labor force declined three-tenths of a percentage point.
Total manufacturing hours, which he called “a measure of manufacturing sector strength,” dipped 0.8 percent in April, following two months of improvement.
“Suffice it to say that April was not a very good month for Rhode Island’s goods-producing sector,” he wrote in his report.

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