There have been some encouraging economic indicators lately as we head into the holiday season. Cost of living has not risen much, and manufacturers are reporting increased levels of confidence near the end of the year.
Government revenue continues to outperform last year despite the non-arrival of federal funds.
In the third quarter of 2019, Puerto Rico has maintained its middle-of-the-pack position in terms of cost of living when compared with other metro areas in the US. This has been due mostly to low medical costs and housing offsetting astronomical prices when it comes to utilities and groceries. When it comes to attracting investment to the island, this becomes an important indicator to watch out for.
The latest Purchasing Manager’s Index has shown growth for the first time this year since March. In October it rose 9.5% when compared to the previous month of September, going from 43.8 to 48.4.
While an index of less than 50 still indicates a less-than optimal state of manufacturing on the island, the fact that it is growing can tell us that manufacturers are at least feeling a bit less pessimistic about potential for growth. As always, we are on the lookout for the arrival of more federal funding in order to boost manufacturing.
Total net revenue into the local government’s General Fund has increased $700 million since last year. Most of this difference has come not from sales tax figures, where there has been a $10 million reduction, but from taxes paid by corporations.
It remains to be seen whether this rise in taxes from corporations will continue to make up for disappointing sales tax figures that have arisen due to underperforming retail numbers so far this year. Especially after a lackluster Black Friday, businesses will be looking forward to the rest of the holiday season to make up for these sales.