The Puerto Rico Government Development Bank on Wednesday released a revised Economic Activity Index for March that registered a -0.4 percent year-over-year reduction, and a month-over-month increase of 0.5 percent.
The report, designed to summarize the behavior of several monthly economic indicators and make YOY comparisons, was recently changed to improve its reliability and minimize volatility in measurements during the year and to make MOM measurements more reliable, the GDB said.
“To reduce the volatility and to improve the measurement, the seasonal adjustment method to estimate the GDB-EAI was changed. The seasonal adjustment method of the components of the new GDB-EAI was changed from the multiplicative moving average method to the tramo-seats method. Among other advantages, this procedure estimates seasonal factors that can vary across different years,” the agency explained.
“The method reduces the volatility of the seasonal adjusted series, consequently diminishing the volatility of the composite index,” the agency said, adding that as part of the transition into the new methodology, it will publish the previous version along with the new version until June.
Under the new method, the level of the index increased slightly while the volatility was reduced in terms of the MOM and YOY percent changes, with the latter remaining similar to the previous estimates for the past three years, the GDB said.
While the new index shows the -0.4 percent year-over-year reduction, under the old method there is a 1.5 percent reduction in economic activity compared to March 2014, and an increase of 0.1 percent compared to February 2015.
The key indicators performed as follows in March:
- Total non-farm payroll employment averaged 910,800, an annual decrease of 0.6 percent. On a year-to-date basis, total non-farm payroll employment has declined by 1.5 percent.
- Electric power generation totaled 1,665.3 million kWh, an annual reduction of 4.6 percent. On a year-to-date basis, electric power generation has declined by 2.7 percent.
- The preliminary number for gasoline consumption was 90.7 million gallons, 9.3 percent above March 2014. On a year-to-date basis, gasoline consumption has increased by 0.5 percent.
- Cement sales totaled 1.30 million bags, registering an annual decrease of 4.6 percent. On a year-to-date basis, cement sales were down by 11 percent.
The GDB said the advantages to the new methodology make the index “readily available, highly correlated to Puerto Rico’s real GNP, a reliable tool to monitor actual trend of Puerto Rico economy, and make month-over-month comparisons now more reliable.”