By The Star Staff
The Economic Activity Index of the Economic Development Bank for Puerto Rico (EAI-EDB) marked 16 consecutive months of positive growth in June, EDB President Luis Alemañy González announced Thursday.
“The Index, which is used to measure the general state of economic activity, registered 124.3 points in June, and at the end of fiscal year 2022 (July 2021 to June 2022) it reached a cumulative level of 124.2 points, a result higher than that obtained from fiscal year 2017 onwards,” Alemañy González said in a written statement. “This represents a growth of 4.5 percent, the first positive result, after two years of consecutive year-on-year reductions, of -2.2 percent in 2020 and -0.8 percent in 2021.”
The EAI-EDB is a coincident index that summarizes the general behavior of the economic activity of the island, which has a high correlation with the levels and growth rates of the real gross product of Puerto Rico, although it is not its monthly estimate, since which, among other things, is calculated based on four components: non-agricultural salaried employment, electricity generation, gasoline consumption and cement sales.
The EDB president said the behavior of the EAI components indicates that there was a combination of temporary factors, typical and recurring during the summer months, with external elements, such as the increase in the barrel of oil during the month of June, which was reflected in the results.
The electricity generation component, after applying the seasonal adjustment, remained stable, or unchanged, when compared to the previous month (May 2022), which means that, with regard to economic activity, it was maintained, even when there was an increase in price. The year-on-year increase (June 2022 against the same month of the previous year) was 7.6 percent. LUMA Energy began operations on June 1, 2021.
The average retail price of regular gasoline on the Island reached $5.09 per gallon (approximately $1.34 per liter) in June 2022, which, unadjusted for inflation, is the highest price on record since data collection began in 1980.
“The end of the school semester for most schools and universities, together with the increase in fuel prices, explains that gasoline consumption, and will reflect month-on-month and year-on-year falls of -5.0 percent and -11.0 percent, respectively,” Alemañy González said. “In other words, during the month of June 2022, gasoline consumption was even lower than the average level that had been experienced and that should be attributed to the increase in price.”
Total cement sales is an indicator that is highly sensitive to all types of local events: climatological, seasonal, socioeconomic, etc., which makes that indicator more volatile in statistical terms than the rest of the components of the Index.
Along with manufacturing, the construction sector was among the first to start operations for May 2020, when the strictest restrictions against COVID-19 were still in effect.
This, tied to the billions in economic aid that individuals received directly, caused an increase in sales from that point on, which, as the construction projects were completed and the aforementioned economic aid was consumed, stabilized the total sales of cement above 1.1 and 1.3 million bags per month, remaining in the high range of the aforementioned average last June 2022, after applying the seasonal adjustment, with a year-on-year growth of 3.7 percent and a low month against month of 1.4 percent.
Employment remains high, registering levels not seen from 2014 to 2015 in total employment; that is, with an average of 900,200 jobs (5.8 percent) in fiscal year 2022.
However, Alemañy González noted that if the growth in employment by sector is examined, sectors that have reached levels registered prior to 2015 or not previously measured are observed.
“An example of this is the professional and business services sector, which for fiscal year 2022 marked a level of 135,000 jobs, or a growth of 12,600 jobs (10.3 percent) when compared to the previous year and that for the period from January to June 2022 it reached an average of 136,900 jobs or 11,700 additional jobs (9.3 percent), when compared to the same period of the previous year,” he said. “This is the highest data recorded since this series began to be computed in 1990.”
The commercial sector, meanwhile, reached a level during 2022 not seen since 2008 to 2009, with an average of 162,900 jobs (6.0 percent) during fiscal year 2022 and 163,800 jobs (5.4 percent) for the period from January to June 2022. Therefore, employment in the private sector has marked an increase of 7.8 percent in the period from January to June 2022 with an average of 714,500 jobs, while the government has experienced a reduction of 1.1 percent with an average of 193,600 jobs. Seasonally adjusted, non-farm wage employment grew 4.9 percent during June 2022, down 0.5 percent month-on-month, Alemañy González said.
“The improvement we are seeing in economic activity is consistent with the high levels of employment recorded on the island,” he said. “Cement sales continue to exceed one million bags per month, and electricity generation is on the rise. However, the increases in the retail prices of gasoline seem to have moderated monthly consumption, with reductions being noted in the quarter from April to June.”
Meanwhile, the outlook for global economic growth points to a slowdown, while various sources of economic analysis have not yet ruled out the possibility of the United States entering a recession.