Economic Dev’t unveils new Manufacturing Coincident Indicators Index
The Department of Economic Development and Commerce unveiled a new Manufacturing Coincident Indicators Index, a new metrics and analysis tool to illustrate the sector’s economic activity, which agency Secretary Manuel Laboy said reflects that the industry is maintaining a recovery rate.
“The most recent report corresponding to October 2020 showed that manufacturing continues to gain ground despite having registered one of the most significant monthly decreases in a long time during April 2020 due to the total closure declared due to the spread of COVID-19,” Laboy said.
“Industrial activity, measured by the Manufacturing Coincident Indicators Index, when compared to the month of September of the current year, increased 0.9%,” said Laboy, adding that this is the fifth increase registered in the last six months.
However, when comparing the October 2020 report with the same month of the previous year, the Manufacturing Coincident Indicators Index registered a drop of 2.0%, a direct consequence of the reduction in economic activity as a result of the pandemic, he said
“This is the lowest annual reduction since the pandemic began and represents the seventh consecutive drop in the Index after having registered 19 increases in a row before the lockdown, showing that this factor interrupted the sector’s recovery process,” he said.
The methodology used in this tool is based on the formulas used by The Conference Board, which rely on an index development base in use for several decades.
The index has been being calculated internally for more than a year-long test period and like any metric instrument, its behavior and design was constantly analyzed to detect changes in the economic structure of Puerto Rico and recalibrate it to keep it up to date, Laboy explained.
The components included in the Manufacturing Coincident Indicators Index are: Non-agricultural salaried employment; payroll; hours worked; indexed commercial balance; and industrial energy consumption.
“Some of the tasks of the Manufacturing Coincident Indicators Index are to identify and analyze short-term turning points in the economy, to analyze the impact of the economic cycles in Puerto Rico, the United States mainland, and the world in reference to the local analysis, among others,” Laboy said.