PR economy breaks into positive terrain for first time since spring 2006

By: John Marino / Caribbean Business

The Government Development Bank-Economic Activity Index for December 2011 showed its first year-over-year growth since March 2006 at the start of Puerto Rico’s years-long recession, officials announced Monday.

The GDB-EAI hit 127.7 in December, a 0.5% increase over the previous December, officials said.

Citing the GDB-EAI’s 98% degree of correlation with real gross national product levels, officials expressed hope that after a stabilization period of more than a year, the Puerto Rico economy is finally breaking into positive terrain.

Total payroll employment, one of four components comprising the GDB-EAI, hit 934,600, a 0.2% improvement over the year-prior period and the first month reflecting positive growth since early 2006.

Cement sales, another GDB-EAI indicator, totaled 1.618 million bags in December, a 13.9% increase over the same period in 2010. Total cement sales for calendar year 2011 ended 5.4% above 2010.

Meanwhile, gasoline consumption reached 95.3 million gallons in December, an increase over the average 87.1 million gallons consumed monthly during 2011, according to GDB officials.

Only one of the four indicators — electric power consumption ― declined compared with last year, with December consumption registering a 1.7% decline over the same period the previous year.

The positive year-over-year growth follows three straight months in which the GDB-EAI showed month-to-month improvements, and in November it fell a mere 0.1% when compared to the year-prior period. However, the December performance of 127.7 was actually a slight decrease from the 128.2 registered in November.

There are other indicators that the economy is on the rebound, notably the unemployment rate dropping to 13.2% in December, the lowest rate since January 2009. Car and home sales and manufacturing production have also been on the rise, while bankruptcies are finally retreating.

Nevertheless, the most recent figures could well spell the best economic news since the recession began nearly six years ago in March 2006. If the year-over-year growth keeps up for the next few months, it would mark the end of the recession. A widely used definition is that a recession begins after two quarters of economic decline, and ends after two quarters of growth.