Every month, the Economic Development Bank (EDB) releases a brief report on Puerto Rico’s Economic Activity Index (EAI). Such report reveals that the index for September of this year was at 122.6, a decrease of 0.8% when compared to September of 2021. When compared by the same month during the prime of the Covid 19 pandemic (September 2020), the EIA showed an increase of 4.6%. This substantial growth portrays Puerto Rico’s economy that has recovered at a quick pace in which it has returned to pre-pandemic levels.
It is best to know that the EIA is an approximate indicator for the Gross National Product (GNP). This is because the indicator considers general economic activity and does not include all the economic sectors that comprise the GNP. However, it is useful to use such indicator to understand where the state of the economy is currently standing at the present time. Such indicator is based on the activity of four major components in the Island, which are total non-farm payroll employment, electric power generation, gasoline consumption, and cement sales. Two of these four economic categories showed a toll in their respective measurements, said indicators being electric power generation and total cement sales.
The slight decrease in the EIA occurred thanks to Hurricane Fiona which struck the Island during September of 2022. Due to the event, this caused a power outage in the island which lasted weeks leaving consumers without electricity. Along this line, it is no surprise to observe electric energy generation reflect a decrease of 23.7% when viewed at a year-over-year rate; and when viewed at a monthly basis, a 21.0% decrease. On the other hand, the case for the gasoline consumption variable is different, since said indicator saw a year-to-year increase of 2.1%, but, when compared at a monthly basis, its change reflected an increase of 7.1%.
Furthermore, cement sales performance saw an ample decrease of 21.1% at a year-over-year basis. When compared at a monthly basis, its change reflected a decrease of 20.5%. As discussed before, Hurricane Fiona not only affected economic activity for consumers, but it also affected business activity (or at least to those related in using cement in their line of work). However, even if a month-over-month saw a slight decrease of 0.9%, non-farm payroll employment saw a growth of 3.7%.
Puerto Rico’s Economic Activity Index has been accounting for the local economy’s improvement for the last eighteen months. Nevertheless, during the month of September 2022 showed a contraction which is a result of a natural event in which affects by default any economic activity that is stricken by it. It is important to denote how global economic tendencies might show their effects in our economic activity index throughout the following months.