September 2, 2014 / 5:55 PM / 5 years ago

Puerto Rico economic activity drops to 20-year low

NEW YORK, Sept 2 (Reuters) - Economic activity in Puerto Rico fell in July for a nineteenth straight month to a 20-year low, according to a government economic activity index published on Friday.

The Government Development Bank’s economic activity index (EAI) fell 0.7 percent year-on-year in July. That brought the index level back to 125.1, the lowest since 1994.

The report is another indication that the island’s economy continues to struggle, posing a headache for the government as it deals with budget deficits and high levels of debt.

Puerto Rico says the index strongly correlates to the island’s gross national product. Puerto Rico’s economy has been in or near recession since 2006.

However, the EAI, which began a steep decline in 2006 that did not halt until 2011, has shown some signs of stabilization since then, despite July’s drop.

July’s drop was mainly concentrated in cement sales and gasoline consumption. Cement sales fell 6.9 percent year-on-year to 1.25 million bags in July, while gasoline consumption dipped 7.2 percent to 81.9 million gallons.

On the positive side, total non-farm payroll employment rose 0.2 percent in July to 904,300.

Puerto Rico’s benchmark general obligation bonds eased slightly on Tuesday. Bonds maturing in 2035 with a coupon of 8 percent traded at an average price of 91.542 cents on the dollar, compared with 91.625 on Friday, according to Thomson Reuters data.

The index’s fourth element, electrical power generation, fell 0.2 percent in July to 1.9 billion kilowatt hours. (Reporting by Edward Krudy; Editing by Steve Orlofsky)

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