Monday, September 16, 2019

Puerto Rico Economic Activity Index drops 0.4% in September

By on October 30, 2018

SAN JUAN – Puerto Rico’s Economic Development Bank (EDB) published Tuesday the Economic Activity Index (EAI) for September 2018, which stood at 121.5, a decrease of 0.4%.

Year-over-year, however, “the percent change increased by 5.2%, the first year-over-year increment after 69 consecutive months of negative growth. This annual comparison is with respect to September 2017, when the Island was struck by hurricanes Irma and Maria and the EAI-EDB showed a year-over-year reduction of 7%,” EDB President Rafael Rodríguez said.

The EDB-EAI is made up of four indicators:

  • – Total Payroll Employment (Establishment Survey/Thousands of employees). This variable is provided by the Bureau of Labor Statistics of the U.S. Department of Labor and Human Resources (BLS) on a monthly basis. The establishment survey provides employment, hours, and earnings estimates based on payroll records of business establishments in Puerto Rico.
  • Total Electric Power Generation (Millions of kilowatt-hours [kWh]). This variable is provided by the Puerto Rico Power Authority (PREPA) on a monthly basis. This indicator includes the electric power generation produced by petroleum, natural gas, coal and renewable energy sources. The renewable energy is supplied by utility-scale solar photovoltaic generating capacity, two wind farms and landfill gas sources.
  • Cement Sales (Millions of 94-pound bags). This variable is provided by CEMEX Puerto Rico & Argos Puerto Rico LLC on a monthly basis. The data are compiled and converted by the EDB.
  • Gas Consumption (Millions of gallons). This variable is provided by Puerto Rico Highways and Transportation Authority (PRHTA) on a monthly basis. The EDB adjusts the series with a three-month moving average.

“The accumulated average of the EAI for the period from August to September of fiscal year 2019 registered a level of 119.7, a percentage decrease of just 1.6% versus the result for the same period of fiscal year 2018. In addition, the accumulated average of the EAI from July to September of fiscal year 2019 registered a level of 121.7, which translates to 1.5% percent growth versus the result for the same period of fiscal year 2018,” the EDB said in its announcing release.

Cement sales, electric power generation and gasoline consumption were the components that reflected a year-over-year rise for September.

Average nonfarm payroll employment for September was 853,100 employees, a reduction of 1% versus August 2018 or 1.9% when compared with September last year.

In September, 1.2 million bags of cement were sold, a 2.5% increase over August sales and 285.5% more than in September 2017.

The preliminary estimate for gasoline consumption in September was 79 million gallons, an increase of 4.4% over August. The figure also represents an increase of 10% when compared with September 2017.

Electric power generation was 1.56 billion kWh, or 2.5% more than the previous month and 74.4% greater than in September last year, when gas stations, for example, sustained hurricane damage and closed for varying periods.

The EDB-EAI is an indicator of general economic activity, not a direct measurement of real gross national product (GNP). The annual growth rate of the EAI is not the same as the annual growth rate of the real GNP. The EAI does not include all the economic sectors that comprise the GNP.

However, the indicator has a high correlation with real GNP for monitoring trends in the economy. This index’s methodology is similar to that used in the Conference Board’s coincident index of the U.S. economy. The methodology follows a standard procedure to adjust the data for seasonality and volatility factors.

See the EDB’s entire EAI document here.

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