Tuesday, March 28, 2023

Puerto Rico Economic Activity Continued Annual Decline in December

By on February 17, 2021

Covid-19 crisis drove power, gasoline use and employment lower; Cement sales rose 

SAN JUAN – The Covid-19 pandemic emergency continued to exert a negative impact on Puerto Rico’s economy at the end of 2020, according to the latest Economic Development Bank’s Economic Activity Index (EDB-EAI). 

The index, a leading indicator of the island’s economy, registered 115.7 points in December, a 6.4 percent contraction when compared to December 2019—the tenth consecutive drop since March of last year, when the commonwealth government started to implement Covid-19 pandemic restrictions. The index had recorded 19 consecutive year-over-year increases between August 2019 and February 2020. 

Still, the December index increased by 0.3 percent compared to the previous month of November.  

The EDB-EAI’s steepest drops in 2020 were registered in the months of May and June, when the index plunged 10.2 percent and 10.8 percent, respectively, when compared to the same months in 2019. These were the sharpest index reductions since hurricanes Irma and Maria struck the island in September 2017. The index registered a year-over-year contraction that was by as much as 20 percent in November 2017. The economy recovered a year later in tandem with disaster relief efforts, when the index rose by as much as 23.5 percent.  

During fiscal year 2020, which ended last June 30, the EDB-EAI decreased by 2 percent compared to the previous fiscal year, and dropped 7.1 percent between July and December, the first six months of fiscal year 2021. The index dropped 6 percent during calendar year 2020 compared to the previous year, after having increased 1.6 percent during calendar year 2019,  which had been the second consecutive annual positive growth after five years of uninterrupted reductions. 

Three of the four indicators constituting the seasonally adjusted EDB-EAI registered year-over-year decreases in December. 

The preliminary estimate for gasoline consumption in December totaled 71.6 million gallons, a decline of 9.2 percent compared to December 2019, but 6.1 percent higher with respect to November. 

Total non-farm payroll employment averaged 813,700 employees for December 2020, constituting an annual decrease of 7.9 percent and a month-to-month reduction of 0.7 percent. 

Electric power generation for December totaled 1,541.4 million kilowatt-hours (kWh), declining by 1.1 percent on a month-to-month basis, and an annual reduction of 3.7 percent. 

In contrast, cement sales totaled 1.4 million of 94-pound bags in December, an upsurge of 10 percent over November, and a 28.4 percent climb compared to December 2019. 

To reach pre-pandemic levels, the economic activity will require a “consistent multi-sector recovery pace,” according to the EDB-EAI report for December, prepared by the bank’s Office of Economic Studies. 

“Although a rebound in economic activity is observable, it is decelerating since the employment sectors most affected by the pandemic crisis (that is: services, commerce and tourism, among others) have yet to recover,” the report states. “Alternatively, the resulting job losses would need to be absorbed by other industries.” 

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