Puerto Rico’s economy showed clearer signs of stabilization in August 2026, with activity rising for a third consecutive month. Economist Ángel Rivera Montañez said the improvement is not enough to dispel the possibility of a new contraction, given internal and external risks. He described the recent behavior as a relief after seven consecutive months of contraction that led to a short and moderate recession, but said the economy still operates below earlier levels and some indicators remain compatible with a recessive scenario.
Manufacturing is the main driver of the recovery, adding about 1,100 jobs over the last three months, while non-agricultural wage employment also kept rising. Rivera said this shows labor-market resilience despite high operating costs, particularly energy, and institutional and geopolitical uncertainty. The Coinciding Indicators Index (IIC) rose a preliminary 0.6% in August from the prior month, to 111.3 points (2019 base), led by manufacturing and construction, plus electrical energy production and wage employment.
Activity rose year over year for a second straight month after six months of contraction, but the first eight months of 2026 show an average decline of 0.4%. Fiscal year 2027 looks slightly better, up 0.4% versus the same period a year earlier. The Index of Leading Indicators (IIA) rose for a third month after five declines.
Rivera said lower initial unemployment claims were mainly due to administrative and classification factors. Higher oil prices and interest rates remain adverse; the IIA has six months of negative annualized variation, averaging a 1.8% drop, and its Diffusion Index is below 50.