Economic Activity Index shows ‘encouraging’ results in October
Puerto Rico’s Economic Activity Index reached 120.4 in October, with indicators reflecting a “substantial improvement,” Economic Development Bank President Luis Burdiel said.
“The EAI for October recorded a level of 120.4, representing a substantial increase of 15.5 percent compared to the same month last year, with this being the second increase after 69 consecutive months of annual reductions,” said Burdiel.
“More importantly, the cumulative average EAI for what is the fiscal year 2019 recorded a level of 121.4, which translates into growth of 4.6 percent versus the result showed for the same period of fiscal year 2018”, he said Burdiel.
During the month of October 2018 cement sales increased by 132.4 percent and power generation grew by 420 percent. Meanwhile, gasoline consumption rose by 4.2 percent and non-farm payroll employment increased by 2.1 percent compared to October 2017.
For the period from July to August of Fiscal 2019, the occupancy rate in hotels and small inns was 72.2 percent, which means a reduction of less than 5.7 percent when compared to the same period in Fiscal 2018.
However, for August 2018, the movement of passengers on cruise ships was 134,274, compared to 114,186 in August 2017, leading to an increase of more than 20,088 passengers — or 17.6 percent.
Meanwhile, the number of homes sold for the period from July to September for the current fiscal year totaled 2,874, compared to 1,877 sold for the last fiscal year, which meant an increase of almost 1,000 more homes sold, or 35 percent.
According to data provided by the U.S. Bankruptcy Court, the number of bankruptcies for the period from July to September of 2018-2019 was 1,999, which means a drop when compared to the same period for fiscal years 2014 -2015 (2,718,) 2015-2016 (2,665,) and 2016-2017 (2,633.) That is, a reduction of at least 25 percent in bankruptcy filings when compared to any year of the past four years, the agency noted.
While all of those elements are part of economic growth, neither passenger movement, nor homes sold, nor bankruptcy filings constitute EAI indicators.
As we said in our PR Economic Compass Publication, be careful with these comparisons against October 2017 when the Island was in darkness and in silence. The base (October 2017) was so low that any increases in October 2018 are magnified in percentages. This could be a mirage instead of sustainable growth.