Puerto Rico’s employment figures will probably get a boost when the Bureau of Labor Statistics revises data for U.S. states and territories next month, according to the Federal Reserve Bank of New York.
From June 2012 to June 2013, job losses will probably total just 10,000, compared with the currently reported 44,000, for a decline of 1.1 percent instead of 4.7 percent, Jason Bram, a New York Fed researcher, wrote in a blog post today. From mid-2013 on, levels may also be higher than reported, potentially by as much as 25,000 jobs.
Puerto Rico lost its investment grades from the three biggest ratings companies this month in part because its economy has contracted for six of the past seven years. The government and its agencies are burdened with $70 billion of debt. The revisions will improve the Government Development Bank’s economic activity index, which is used to gauge the island’s fiscal health, Bram said.
“Puerto Rico’s labor market appears to not have been as weak in 2013 as the currently reported employment data suggest,” Bram said in the report. “Conditions are not as gloomy as they appear.”
However, more recently, “it is certainly conceivable that there has been renewed weakening,” he said. “The recent rating agency downgrades of the commonwealth’s debt are not likely to help matters.”
Employment in education and health services should be revised up by 5 percent, professional and business services by 4 percent and leisure and hospitality by 2 percent, the report said. Construction will probably remain “exceptionally weak,” Bram said.
The Labor Department issues annual benchmark revisions of employment figures based on data from the Quarterly Census of Employment and Wages, which provides a more complete count of jobs than preliminary monthly estimates.
Puerto Rico’s jobless rate was 15.4 percent in December, compared with the 6.7 percent national average.
Governor Alejandro Garcia Padilla said this week that including construction and retail employment, businesses created about 41,000 jobs in the past year. Even with those new positions, non-farm payrolls in December shrank by 2.6 percent from the same month in 2012, according to the GDB.
The commonwealth’s job market took a hit in 2006, at the end of a 10-year phaseout of an incentive that had offered businesses outside Puerto Rico tax-free U.S. income for operations on the island. The recession on the mainland that began in December 2007 also hurt Puerto Rico.
Garcia Padilla’s plans include a goal of creating 58,400 positions by 2017 in life-sciences, tourism and agriculture.
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