December 2013

Economic Activity Index (GDB-EAI)

Clarification about the interpretation of

the GDB-EAI figures
The GDB-EAI is an indicator of the general economic activity, not a direct measurement of
the real GNP. Moreover, the GDB-EAI annual growth rates are not the same as the real GNP
growth rates, because the former are more volatile than the latter.

When it is annualized, the level of the EAI is highly correlated with the level of the
real GNP (with a Pearson correlation coefficient of 0.9883, for FY1981-FY2012).

The annual growth rates of both variables are also highly correlated (with a Pearson
correlation coefficient of 0.9461, for FY1982-FY2012).

Nevertheless, the annual growth rate of the EAI IS NOT the same as the annual growth
rate of the real GNP. Being highly correlated does not mean being equal.
In order to approximate real GNP growth from the EAI annual growth, we estimate a
linear regression model relating both variables.
Plugging in the EAI annual growth rates into the resulting equation we obtain estimates
for the annual growth rates of the real GNP.
This transformation generates an approximation of the actual real GNP growth figures.

Clarification about the interpretation of

the GDB-EAI figures (2)
Here is a comparison of the annual growth rates of the GDB-EAI with the actual real GNP
figures. There are also estimates of the annual growth of the real GNP using the figures
coming from the GDB-EAI.

Notice that the real GNP growth estimates

coming from the EAI are relatively close to the
actual real GNP growth figures.

Clarification about the interpretation of

the GDB-EAI figures (3)
Here is a comparison graph of the actual real GNP figures and the estimates of the annual
growth of the real GNP using the figures coming from the GDB-EAI.

General Commentary December 2013

GDB-EAI for the month of December registered a decrease of 1.0% on a month-over-month
basis and a 5.2% reduction compared to December 2012

On a month-to-month basis, December is the first decline since August and consistent with a
stabilization scenario. December 2013 EAI was 124.5, a 5.2% reduction compared to December 2012.

The preliminary number of gasoline consumption* was 82.1 million gallons in December 2013, 8.9%
below December 2012.

Total non-farm payroll employment for December 2013 averaged 922,600, an annual reduction of
2.6%. However, employment has grown in every single month since August 2013.

Electric power generation for December 2013 totaled 1,695.3 million kWh, an annual decrease of
4.7%.

Cement sales for December 2013 totaled 1.02 million bags, registering an annual reduction of 18.0%.
Rainfall in December 2013 was 43% higher than in December 2012 and probably contributed to the
decline.

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.

GDB-EAI
Y-O-Y % change

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

110

Oct-09

115

Jul-09

120

Apr-09

125

135

105

100
-5.2%

-0.6%
-1.1%
-4.3%
-1.3%
-5.1%
-0.5%
-5.9%
-0.6%
-6.1%
0.0%
-6.2%
-0.1%
-6.2%
-0.5%
-5.8%
-0.1%
-6.0%
-0.7%
-5.7%
-0.1%
-6.0%
-0.4%
-5.5%
-1.0%
-5.8%
-0.2%
-6.1%
0.0%
-5.3%
0.4%
-4.1%
-0.3%
-3.1%
-1.0%
-2.8%
-1.0%
-3.8%
0.0%
-4.6%
0.6%
-4.2%
0.6%
-3.5%
-0.4%
-2.4%
-0.9%
-2.6%
-0.3%
-3.1%
0.0%
-2.4%
0.0%
-2.2%
-0.1%
-2.2%
-0.2%
-2.8%
-0.2%
-2.7%
-0.8%
-1.9%
-0.6%
-1.7%
1.0%
-2.3%
1.1%
-1.9%
1.2%
-1.4%
0.1%0.0%
0.3%
1.0%
0.1%
1.6%
-0.7%1.6%
0.1%
1.0%
-0.4%
1.2%
0.4%
1.1%
-0.6%
1.6%
0.0%
1.9%
0.8%
2.5%
0.8%
2.2%
0.4%
1.9%
-1.5% 1.1%
-1.1%
-0.4%
-1.8% -1.1%
-0.8%
-2.9%
-0.3%
-3.1%
-0.4%
-3.4%
-0.8%
-3.4%
-1.0%
-4.6%
-0.6%
-5.0%
1.1%
-5.6%
0.6%
-5.2%
0.1%
-5.4%
-1.0%
-5.7%

145
10%

140
8%

0%

Percent

142.1
140.6
138.8
138.1
137.2
137.2
137.1
136.4
136.3
135.5
135.3
134.8
133.5
133.2
133.1
133.7
133.3
132.0
130.7
130.7
131.5
132.3
131.7
130.6
130.2
130.3
130.2
130.0
129.7
129.5
128.4
127.7
129.0
130.4
131.9
131.9
132.3
132.4
131.5
131.6
131.1
131.6
130.8
130.9
131.9
132.9
133.4
131.4
129.9
128.5
127.4
127.1
126.6
125.5
124.2
123.5
125.0
125.7
125.8
124.5

130

Jan-09

Index (January 1980 = 100)

For December 2013 the GDB-EAI reflected year-over-year (y-o-y) reductions of 5.2%.

After showing three consecutive months of positive month-over-month (m-o-m) growth rates the
Index exhibited in December a reduction of 1%, on a m-o-m basis.

GDB Economic Activity Index

6%

4%

2%

-2%

-4%

-6%

-8%

-10%

Month

M-O-M % change

 The behavior of the EAI may be observed here since January 2005. During 2005 the EAI reached
its highest level, and during 2006 it started to show significant year-over-year reductions.

Highest point of
the index
(Nov. 2005)

160

Starting point of
continuous y-o-y
declines
(Apr. 2006)

GDB Economic Activity Index

10%
9%

155
Return to the
y-o-y
reductions
(Dec. 2012)

150
First y-o-y
increase
(Nov. 2011)

140
135

125
120
115
110

6%
5%
4%

3%
2.6%
1.0%2.2%
0.7%

2.5%
1.2%
1.1%
1.1%
1.0%
2.2%
0.8%
0.8%
0.8%
2.1%
0.7%
0.6%
0.6%
0.6%
1.9% 1.9%
0.5%0.4%
0.4%
0.4%0.4%
0.4%
0.4%
0.3%
1.6%
1.6%
1.6%
0.2%
0.2%
0.1%
0.1%0.1%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0% -0.1%
0.0%
0.0%
0.0%
0.0%
0.0%0.1%1.2%
-0.1%-0.1%-0.1% -0.2%
-0.1%1.3%
-0.1%
-0.2%-0.3%-0.2%
-0.2%
-0.2%
-0.2%
1.1%
-0.2% -0.3%-0.2%
-0.2%
-0.2% -0.3%
-0.3%
1.1%
-0.3%
1.0%-0.4%
-0.3%
1.0%
1.0%-0.3%
1.0%
-0.3%
1.0%
-0.4%
-0.4%
-0.4%
-0.4%
-0.4%
-0.4%
-0.4%-0.5%-0.5%
-0.4%
-0.6%
-0.6%
-0.6%
-0.6%
-0.6%-0.6%
-0.6%
-0.6%
-0.6%
-0.6%-0.6% -0.5%
-0.6% -0.5%-0.7%
-0.6%
-0.7%
0.6%
0.6%
0.6%
-0.8%
-0.8%
-0.8%
0.5%
0.5%
-0.8%
-0.9%
-0.9%
-1.0%
0.4%
-1.0%
-1.0%
-1.0%
-1.0%
-1.1%
-1.1%
-1.1%
-1.1%
0.1%
-1.3%
-1.5%
-0.2%
-0.4%
-0.6%
-0.6%
-0.7%
-0.8%
-0.9%
-0.9%
-1.1%
-1.3%-1.1%
-1.4%
-1.4%
-1.4%
-1.4%
-1.6%
-1.7%
-1.8%
-1.8%
-1.9%
-1.9% -1.9%
-2.0%-1.9%
-2.2%
-2.2%
-2.3%
-2.3%
-2.3%
-2.4% -2.4%
-2.6%
-2.6%
-2.7%
-2.7%
-2.8%
-2.8%
-2.8%
-2.9%
-3.0%
-3.1%
-3.1%
-3.1%
-3.2%
-3.2%
-3.4%
-3.4%
-3.4%
-3.5%
-3.5%
-3.8%
-3.9%
-4.1%
-4.2%
-4.2%-4.2% -4.1%
-4.4% -4.3%
-4.6%
-4.6%
-4.7%
-5.0%
-5.1%
-5.2% -5.2%
-5.3%
-5.5%
-5.6%-5.4%
-5.7%
-5.8%-5.7% -5.8%
-5.9%
-6.0%-6.0% -6.1%
-6.1%
-6.2%
-6.2%
1.9%

130

7%

2%
1%

0%
-1%

Percent

-2%
-3%
-4%
-5%
-6%
-7%
-8%

105
154.3
154.1
153.5
155.0
156.1
156.2
154.6
154.7
155.5
155.7
156.4
155.7
155.9
154.9
154.4
154.1
154.1
153.3
152.9
152.6
153.8
154.8
155.1
154.5
153.7
152.4
151.4
150.5
151.1
151.2
151.8
151.1
151.0
150.7
150.4
149.1
148.5
148.1
147.4
147.1
146.3
146.3
145.5
145.2
144.6
144.1
143.2
143.0
142.1
140.6
138.8
138.1
137.2
137.2
137.1
136.4
136.3
135.5
135.3
134.8
133.5
133.2
133.1
133.7
133.3
132.0
130.7
130.7
131.5
132.3
131.7
130.6
130.2
130.3
130.2
130.0
129.7
129.5
128.4
127.7
129.0
130.4
131.9
131.9
132.3
132.4
131.5
131.6
131.1
131.6
130.8
130.9
131.9
132.9
133.4
131.4
129.9
128.5
127.4
127.1
126.6
125.5
124.2
123.5
125.0
125.7
125.8
124.5

Index (January 1980 = 100)

145

8%

100

-9%
-10%

Month

Value

Month-on-month percent change

Year-on-year percent change

 The complete series of the EAI, which starts in January 1980, shows the recessions of FY1982
and FY1983, the mild recession of FY1991, the recession of 2001, and the sharp but temporary
effects of two hurricanes. It also shows the path of the Index since the beginning of the current
recession.
GDB Economic Activity Index
160

150

130

Hurricane
Georges
(Sep. 1998)

120

110

Hurricane
Hugo
(Sep. 1989)

100

90

Jan-13
Dec-13

Jan-12

Jan-11

Jan-10

Jan-09

Jan-08

Jan-07

Jan-06

Jan-05

Jan-04

Jan-03

Jan-02

Jan-01

Jan-00

Jan-99

Jan-98

Jan-97

Jan-96

Jan-95

Jan-94

Jan-93

Jan-92

Jan-91

Jan-90

Jan-89

Jan-88

Jan-87

Jan-86

Jan-85

Jan-84

Jan-83

Jan-82

Jan-81

80
Jan-80

Index (January 1980 = 100)

140

Month

GDB Economic Activity Index Components

Total Non-Farm Payroll Employment*
(Thousands of jobs)
980

Total non-farm payroll employment for

December 2013 averaged 922,600, an
annual reduction of 2.6%. Employment
has been recovering from 883,400 in
August.

960
940
920
900
880
860
Dec-13

Sep-13

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

May-11

Jan-11

Sep-10

May-10

Jan-10

840

Cement Sales
(Cement bags sold, in thousands)

Cement Sales for December 2013 totaled

1.02 million bags, an annual decrease of
18.0%. Heavy rains were a factor in this
decline. The rainfall in San Juan in
December 2012 was 5.3 inches while in
2013 it reached 7.6 inches or 43% more

2,000
1,800
1,600
1,400

Sep-13

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

May-11

Jan-11

Sep-10

May-10

Jan-10

1,000

Dec-13

1,200

Sources: BLS and GDB

* Not seasonally adjusted.

GDB Economic Activity Index Components

Gasoline Consumption
(Millions of gallons)
120

The preliminary estimate of gasoline

consumption* for December 2013 was
82.1 million gallons, for an annual
decrease of 8.9%.

100
80
60
40
20
Dec-13

Sep-13

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

May-11

Jan-11

Sep-10

May-10

Jan-10

Electric Power Generation

(Millions of kWh)

Electric power generation for December

averaged 1,695.3 million kWh, an annual
decline of 4.7%.

2,500
2,000
1,500
1,000
500

Sources: GDB, PRHTA and PREPA

Sep-13
Dec-13

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

May-11

Jan-11

Sep-10

May-10

Jan-10

*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

Description of the
GDB-Economic Activity Index

11

GDB-EAI Highlights and Composition

GDB Economic Activity Index Highlights
Advantages of the GDB-EAI:
Readily available
Highly correlated to Puerto Ricos real GNP
Reliable tool to monitor actual trend of Puerto Rico economy
The GDB-EAI is made up of 4 indicators:
Total Payroll Employment (Establishment Survey/ Thousand of employees)

Total Electric Power Generation (Millions of kWh)

Cement Sales (Millions of bags)
Gas Consumption (Millions of gallons)
12

Description of the GDB-EAI

The GDB-EAI is a coincident index for the economic activity of Puerto Rico. It is highly correlated
to the Puerto Ricos real GNP not only on the levels, but also on the annual growth rates.
This index was developed following the methodology similar to that used by The Conference Board
in their coincident index. 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
Relationship on the growth rates: FY1982-FY2012

Relationship on the levels: FY1981-FY2012

y = 0.741x + 0.0062

R = 0.9768

8,000
GNP54 Annual Growth

7,000
6,000
5,000
4,000

GDBEAI
(January 1980=100)

160

150

140

130

120

110

100

90

3,000
80

GNP54
(Million of dollars at 1954 prices)

y = 49.551x - 413.49

R = 0.8953

5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

GDBEAI Annual Growth

Sources: GDB

13

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