Puerto Rico sees strongest economic uptick in six months, report shows
Puerto Rico’s economy experienced its most significant monthly growth in the past six months during April 2025, driven by improvements in manufacturing and nonfarm payroll employment, according to the latest Economic Cycle Indicators report.
“The recent increase in the coincident and leading indicators temporarily reduces recessionary pressures, although they still reflect a pattern of economic slowdown and a warning level for recession,” the report stated.
The Coincident Indicator Index (IIC, in Spanish) rose 0.3% from March, reaching 110.8 points — the highest level since October 2024. This was the third monthly increase in the past six months. Year-over-year, the IIC was up 0.9%, contributing to a total 10.4% increase in economic activity since the post-pandemic rebound began in May 2020.
From a fiscal year perspective (July-April), the economy grew 0.6% compared to the same period a year earlier, when it had grown 2.6%. For the calendar year (January-April), the growth rate also stood at 0.6%, down from 2.9% in 2024 — reinforcing signs of a broader slowdown.
April’s growth was attributed to positive performance in nonfarm payroll employment, the manufacturing index and estimated retail sales. However, declines in construction and electric power generation limited the overall increase, according to the report, signed by economist Ángel Rivera-Montañez.
The Leading Indicator Index (IIA, in Spanish) increased 0.9% from March — the sharpest monthly gain in the past 12 months and the second consecutive month of growth. This suggests a temporary easing of recession risks, the report stated.
“The recent increases in the leading index suggest a reduction in the recessionary pressures that had intensified in prior months, fueled by persistent uncertainty that has yet to dissipate,” the report added.
Factors contributing to the IIA’s increase included fewer initial unemployment claims, more hours worked in manufacturing and a stable average oil price. The money supply (M2) remained constant, supporting inflation control and overall activity.
Purchasing expectations in the manufacturing sector also remained positive. The Puerto Rico Purchasing Managers’ Index (PR-PMI) stayed above the 50-point threshold for a fourth consecutive month, indicating short-term expansion.
On an annual basis, the IIA rose 1% in April — the seventh straight month of year-over-year gains after 32 months of declines. Despite recent growth, the economy continues on a deceleration path, the report said.
“There is still no compelling evidence of a pronounced downturn in economic activity that would lead to a recession in the first half of 2025,” it stated.
The IIC’s diffusion index rose to 51.9 in April, signaling modest expansion after two months below 50. The IIA’s diffusion index increased to 65.5, suggesting improvement across a broader range of components.
Despite these signals, the report warned that several risk factors continue to cloud the outlook, including potential budget cuts affecting reconstruction, inflation and ongoing fiscal pressures.
It noted that any significant shift in the economic cycle would depend on the convergence of three elements: duration, dispersion and depth of changes across sectors — conditions that have not yet aligned.
“Immediate risks continue to be a reduction in the pace of public and private spending; a loosening of the money supply; high interest rates; increased global market uncertainty; rising energy and consumer prices; an unsustainable Puerto Rico Electric Power Authority debt restructuring; and a decline in personal consumption expenditures,” the report stated.
The April analysis emphasized the role of composite indices — coincident, leading and lagging — in tracking short-term trends and potential turning points to inform policymaking.
