Economic Activity Index ( GDB-EAI ) March 2017

Transcription

1 Economic Activity Index ( GDB-EAI ) March 2017

2 About the interpretation of the GDB-EAI The GDB-EAI is an indicator of general economic activity, not a direct measurement of real GNP. The annual growth rate of the EAI is not the same as the annual growth rate of real GNP. When it is annualized, the level of the EAI is highly correlated with the level of real GNP (with a Pearson correlation coefficient of , for FY1981-FY2016). Annual growth rates of both variables are also highly correlated (with a Pearson correlation coefficient of , for FY1982-FY2016). Nevertheless, the annual growth rate of the EAI IS NOT the same as the annual growth rate of real GNP. Being highly correlated does not mean being equal. In order to approximate real GNP growth from EAI annual growth, we estimate a linear regression model relating both variables. Plugging in EAI annual growth rates into the resulting equation, we obtain estimates for the annual growth rates of real GNP, which approximate real GNP annual growth figures published by the Planning Board. 2

3 About the interpretation of the GDB-EAI (2) The GDB-EAI is an indicator of the general economic activity, not a direct measurement of real GNP. The annual growth rate of the EAI is not the same as the annual growth rate of real GNP. GDB-EAI annual growth Real GNP annual growth Current estimated real GNP using the GDB- annual EAI growth Fiscal Year % 1.8% 2.1% % 2.3% 2.7% % 1.6% 1.9% % 0.7% 0.5% % -0.6% -1.2% % -1.3% -2.9% % -2.7% -3.8% % -3.2% -3.6% % -1.6% -1.7% % 0.5% % % -2.1% -1.8% % -0.8% -0.7% % -1.1% However, real GNP growth estimates based on the EAI are relatively close (although not identical) to actual real GNP growth figures. Real GNP growth for FY2016 was estimated at using a regression equation with the growth of the EAI as the independent variable, while the Planning Board reported a decline of 1.1%. The index s annual growth is calculated as the annual percentage change of the twelve-month average. For FY2015, the index-based estimate for real GNP growth was very close to the current estimate of the Planning Board. 3

4 Percent change (y-oy) About the interpretation of the GDB-EAI (3) The graph compares actual real GNP growth rates with projected real GNP growth rates based on the GDB-EAI. 4% Annual Growth Rate Comparisons: Real GNP, and real GNP estimated with the GDB-EAI 3% 1.9% 3.0% 2% 1% 0% -1% -2% -3% -4% 1.1% 1.5% 1.8% 2.1% 2.3% 2.7% 1.6% 1.9% 0.5% 0.7% -0.6% -1.2% -1.3% -2.9% -2.7% -3.8% -3.6% -3.2% -1.7% -1.6% 0.5% 0.6% 0.5% -2.1% -1.8% -0.8% -0.7% -1.1% -5% Real GNP annual growth rate Real GNP annual growth rate estimated with the GDB-EAI Real GNP data source: Puerto Rico Planning Board 4

5 Overview March 2017 In March 2017, the GDB-EAI registered a reduction of 2.5% y-o-y, and a decrease of 0.4% in a m-o-m basis. The March 2017 figure for the EAI was 121.0, a 2.5% reduction compared to March 2016, and a decrease of 0.4% compared to February On a year-to-date basis (July 2016 to March 2017) the decline was 2.2% with respect to the same period of the previous fiscal year. Total non-farm payroll employment for March 2017 averaged 882,200, an annual decrease of 1.4%. Electric power generation for March 2017 totaled 1,605.0 million kwh, an annual decrease of 2.9%. The preliminary number for gasoline consumption* in March 2017 was 82.3 million gallons, 3.8% below March Cement sales for March 2017 totaled 1.07 million bags, registering an annual increase of 2.5%. * The monthly gasoline consumption is estimated by the GDB from the Treasury Department's monthly gasoline excise tax collections paid by importers which are transferred to P.R. Highways and Transportation Authority. These collections fluctuate due to changes in inventories and purchases, which do not necessarily reflect the actual monthly consumption reported by retailers. 5

6 % -5.2%-4.3% -3.8% -3.6% -4.2% -4.1% -3.8% -3.2%-2.6% -1.7% -2.0% -1.8% 0.2% -1.1% -1.5% -1.8% -2.2% Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Mar-17 Index (January 1980 = 100) -1.5% -1.1% -1.3% -1.2% -1.0% -0.9% -0.8% -1.0% -0.8% -0.9% -1.0% -1.2% -1.4% -1.6% -2.0% -2.0% -2.1% -1.9% -2.0% -1.7% -1.8% -1.9% -2.4% -2.3% -2.8% -2.5% -2.5% 0.5% 0.9% 0.3% 0.2% 0.1% 0.3% 0.2% 0.1% 0.1% 2.3% 1.9% 1.1% In March 2017, the GDB-EAI registered a 2.5% y-o-y reduction, and a 0.4% decrease on a m-o-m basis. GDB Economic Activity Index % 135 8% 6% 130 4% % 0.1% -0.9% 0.1% -0.4% 0.3% -2.6% -3.0% -2.5% -2.4% -2.4% -2.5% -2.5% -1.8% -1.5% 0.6% 1.0% 1.1% 0.9% 1.0% 1.2% 1.7% 1.8% 2.3% -0.6% -0.6% -0.4% -0.6% 0.2% -0.6% 0.2% -0.4% 0.2% 0.1% -0.4% -0.4% 0.1% -3.1% -3.5% -3.6% -3.6% -3.7% -4.1% -4.1% -3.9% -3.6% -2.9% -2.9% -2.7% -2.4% -2.1% -2.2% -2.8% -2.8% -2.5% -1.7% -0.7% 0.2% -0.4% 2% 0% -2% -4% -6% 105-8% % Value (LHS) Year-over-year percent change (RHS) Month-over-month percent change (RHS) 6

7 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Index (January 1980 = 100) The complete series of the new EAI, which starts in January 1980, shows the recessions of FY1982 and FY1983, the mild recession of FY1991, and the recession of It also shows the downward path of the Index since the beginning of the current recession. 160 GDB Economic Activity Index

8 GDB Economic Activity Index: Data for the past decade PUERTO RICO ECONOMIC INDICATORS GDB Economic Activity Index (January 1980 = 100) GOVERNMENT DEVELOPMENT BANK Economic Analysis Division FISCAL YEAR * JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY JUNE FISCAL YEAR * JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY JUNE FISCAL YEAR * JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY JUNE FISCAL YEAR * AVERAGE DIFFERENCE % CHANGE JUL-MAR AVERAGE DIFFERENCE % CHANGE CALENDAR YEAR AVERAGE DIFFERENCE % CHANGE JAN-MAR AVERAGE DIFFERENCE % CHANGE Source: Government Development Bank for Puerto Rico YEAR OVER YEAR PERCENTAGE CHANGE YEAR OVER YEAR DIFFERENCE SUMMARY DATA 8

9 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 GDB Economic Activity Index Components Total Non-Farm Payroll Employment* (Thousands of jobs) Total non-farm payroll employment for March 2017 averaged 882,200, an annual decrease of 1.4%. 2,500 2,000 1,500 1, Electric Power Generation* (Millions of kwh) Jan-17 Mar-17 Mar-17 Electric power generation for March 2017 averaged 1,605.0 million kwh, an annual decrease of 2.9%. Sources: BLS and PREPA * Not seasonally adjusted. 9

10 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Mar-17 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Mar-17 GDB Economic Activity Index Components Gasoline Consumption* (Millions of gallons) The preliminary estimate of gasoline consumption for March 2017 was 82.3 million gallons, for an annual decrease of 3.8%. Cement Sales* (Cement bags sold, in thousands) 1,900 1,700 1,500 1,300 1, Cement Sales for March 2017 totaled 1.07 million bags, an annual increase of 2.5%. Sources: PRHTA and GDB * Not seasonally adjusted. *The monthly gasoline consumption is estimated by the GDB from the Treasury Department's monthly gasoline excise tax collections paid by importers which are transferred to P.R. Highways and Transportation Authority. 10

11 Description of the GDB-Economic Activity Index 11

12 GDB-EAI Highlights and Composition GDB Economic Activity Index Highlights Advantages of the GDB-EAI: Readily available Highly correlated to Puerto Rico s real GNP Reliable tool to monitor actual trend of Puerto Rico s economy The GDB-EAI is made up of 4 indicators: Total Payroll Employment (Establishment Survey/ Thousands of employees) Total Electric Power Generation (Millions of kwh) Cement Sales (Millions of bags) Gas Consumption (Millions of gallons) 12

13 GNP54 (Million of dollars at 1954 prices) GNP54 Annual Growth Description of the GDB-EAI The GDB-EAI is a coincident index for the economic activity of Puerto Rico. It is highly correlated to Puerto Rico s real GNP in both, levels and annual growth rates. This index s methodology is similar to that used in The Conference Board s coincident index of the US economy. This methodology follows a standard procedure to adjust the data for seasonality and volatility factors. Real Gross National Product as a function of the GDB Economic Activity Index 8,000 7,000 6,000 5,000 Relationship on the levels: FY1981-FY2016 y = x R² = % 4% 2% 0% -2% Relationship on the growth rates: FY1982-FY2016 y = x R² = ,000-4% 3,000-6% -6% -4% -2% 0% 2% 4% 6% GDB-EAI (January 1980=100) GDB-EAI annual growth Sources: GDB 13

14 Disclaimer The GDB-EAI and its indicators are subject to revisions. While the information comprising the GDB EAI has been obtained from sources GDB believes to be reliable, GDB is not responsible for any errors or omissions, or for the results obtained from the use of this information. 14