Puerto Rico’s Economic Activity Index poised to hold steady in 2024
The Puerto Rico Economic Development Bank’s Economic Activity Index (EAI-EDB) showed a 3.4% growth in December compared to the same month the previous year and should reflect a growth of between 2.5% and 3% in 2024, the bank’s president, Luis Alemañy, said in an exclusive interview with News is my Business.
The report indicates the latest increase marks the 11th successive year-on-year rise. Since February 2021, the index has registered positive monthly and year-on-year growth in 31 of the last 35 months, despite a drop of 127.4 points in December, amounting to a month-on-month decrease of 1.6%.
“2023 marked the third year of positive growth for the EAI-EDB, and no changes in this trend are expected, even if employment is revised downwards,” Alemañy said.
The EAI-EDB’s 2023 average was 127.5, reflecting a 3.3% increase from 2022’s average of 121.9. In turn, the index’s average for fiscal year 2023 ended at 124.6, marking a 2.2% rise versus the previous fiscal year, which was at 121.9, or 2.3%.
Both year-ends, fiscal and calendar 2023, showed positive year-on-year growth for the third consecutive time, Alemañy said.
What has anchored the EAI-EDB has been the jobs component, though their growth rate has slowed down somewhat, “because it grew too much since its lowest point in April-May of 2020 with the lockdown,” Alemañy noted. “But the recovery has been such that it exceeded the pre-pandemic levels, and is now stabilizing.”
Looking to 2024, the index’s components — jobs, gasoline consumption, electricity and cement — are expected to remain steady, buoyed by the latter, said Gladys Medina-Claudio, an economist at the EDB Center for Economic Studies.
“Although it’s true that in December cement sales showed negative year-on-year growth, it’s also true that, given the number of construction projects that are about to begin, then yes, these cement sales should remain level or higher [in 2024],” she said.
Next EAI-EDB to be published in April
The agency’s officials confirmed that the next release of the EAI-EDB will be in April and will include data for January and February. The delay is due to the Bureau of Labor Statistics’ (BLS) annual review, which results in a pause in publishing state employment data during February.
“So early in April, an EAI-EDB report will be published that will include the analysis corresponding to January and February 2024. In addition, the team at the EDB Center for Economic Studies takes advantage of this time to work on the annual review of the index,” Alemañy stated.
The BLS’s annual review, or benchmark, of employment data will affect 21 months of data, or from April 2022 to December 2023, he explained.
While the impact of the BLS’s review will not be known until next March, the Federal Reserve Bank of New York publishes an early benchmark review for New York State regional employment, New Jersey, the U.S. Virgin Islands and Puerto Rico, applying a methodology similar to that of the BLS, which they suggest could serve as a useful tool to anticipate the direction and magnitude of potential BLS revisions to the island’s employment data, explained Medina-Claudio.
“Based on the advance benchmark employment data published by the NY Fed, the official nonfarm payroll employment for Puerto Rico could be revised upward for 2022 and downward for 2023, with around 3,200 additional employees in 2022 and about 8,100 fewer than reported for 2023,” Medina-Claudio said.
“However, even replacing the EAI-EDB component of seasonally adjusted nonfarm payroll employment with the NY Fed’s advanced benchmark data, the growth of the economic activity index remains positive, with an increase of around of 2.6% by 2023, or 0.7 percentage points less than the 3.3% reported in the last report,” Medina-Claudio added.
