Monday, March 25, 2019

Puerto Rico Economic Activity Index drops slightly

By on October 9, 2018

SAN JUAN – The Economic Development Bank for Puerto Rico (EDB) published the Economic Activity Index (EAI) for August, which remained above the threshold of 100, indicating expansion, and remained virtually unchanged when compared with July and August 2017, according to the public corporation that also provides financing for private-sector activity that avoids having to rely on imports.

“The accumulated average of the EAI for the period from July to August of fiscal year 2019 registered a level of 121.9, a percentage decrease of just 0.3% versus the result for the same period of fiscal year 2018. Cement sales remained the only component of the index that exhibited an upward trend in interannual terms for August 2018,” the EDB said in its announcing release.

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 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 the Puerto Rico Highways and Transportation Authority (PRHTA) on a monthly basis. The EDB adjusts the series with a three-month moving average.

The coincident index “is highly correlated to Puerto Rico’s real GNP [gross national product] in both level and annual growth rates,” according to the EDB, which warns these are not identical.

In August, 1.2 million 94-pound cement bags were sold, which represents a sales increase of 0.6% compared with July and 23.4% more than in August 2017.

The EDB said that “average nonfarm payroll employment for August 2018 was 859,900 employees, an increase of 0.2% over the month of July 2018 and a reduction of 2% when compared with August 2017.”

The preliminary estimate for gasoline consumption in August was 75.7 million gallons, or 9.2% less than in July and a 4.9% reduction from August 2017. Power generation was of 1.52 billion kWh in August, or 2.2% less than in July and 10.9% less than in August last year.

The index’s methodology includes adjusting the data for seasonality and volatility factors, and is similar to that used by the Conference Board, a nonprofit business research organization that publishes economic indicators for the United States and several other countries.

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