SOUTH KINGSTOWN – Rhode Island’s economy is continuing to show signs that it is in the early stages of recovery, although indicators such as the job market are still “dismal,” according to University of Rhode Island economist Leonard Lardaro’s monthly index of economic conditions.

The Current Conditions Index, which uses 12 economic indicators to generate an economic portrait of Rhode Island, climbed to eight in April – up from zero a month earlier – as one indicator, U.S. consumer sentiment, showed improvement from a year ago.

“Rhode Island’s economy continues to decline, but at slower rates,” Lardaro said in his report issued today. “We are now several months into the process of recovery, which is important to keep in mind since so many performance measures, most notably labor market indicators, continue to be dismal.”

But he added that the direction the state will go from here very well may be determined by state leaders in the coming weeks, as they wrap up 2010 state budget discussions.

“The extent of [the economic indicators’] improvement will be largely determined by budget decisions now being made (or not made),” he cautioned.

Lardaro said particularly encouraging was that it was U.S. consumer sentiment, and not manufacturing wage (the only improving indicator in recent months), that saw an increase. The 4.1 percent rise in consumer sentiment was that measure’s first improvement since August 2008, according to Lardaro.

There were some mixed signals, however. Single-unit housing permits dropped 61.3 percent from a year ago as new home construction remained stagnant. Employment service jobs also fell sharply, 23.2 percent from year-ago levels, but down only slightly compared with March’s numbers, Lardaro said.

Total manufacturing hours declined 12 percent from April 2008, but that measure was virtually unchanged from levels in March.

New unemployment claims, which track layoffs, climbed 26.2 percent in April, but Lardaro noted a bright side to that number: The increase was much smaller than those posted in the previous two months.

Several measures showed that the labor market continues to be bleak.

Private service-producing employment fell 3.3 percent, although it only had a small decrease from March. “The lack of job opportunities here has pushed this indicator to annual rates of decline of around 3 percent since the end of the year,” Lardaro said.

Moreover, government employment fell 2.2 percent in April, as state and local government continued to struggle with their budgets. Lardaro point out, however, that the numbers showed an improvement from the previous month.

Lardaro said the wage for the average manufacturing employee decline below $14 an hour in April, and benefit exhaustions, which reflects long-term unemployment surged in April by 82.7 percent from year-ago levels.

Retail sales continued to deteriorate, failing 6.5 percent in April, its sharpest rate of decline since last November.

Nevertheless, Lardaro sounded an upbeat note in his report.

“As I have noted in the past few reports, the critical prerequisite for Rhode Island to eventually emerge from this recession is consistent improvement in month-to-month indicator changes,” he said. “Over the last few months we have begun to see this, as more indicators have either improved relative to their values the prior month or have come very close to showing such improvement than was true for the yearly changes reflected in the CCI indicators.”

The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economic climate. The index – based on 12 key economic indicators related to housing, retail sales, the employment situation and the labor supply – attained its maximum value of 100 points several times in 1984 and 1986. Additional information, including historical data back through 1980, is available at members.cox.net/lardaro/current.