Valley economic index falls but sits in healthy range

The Business Journal

September 8, 2017

The San Joaquin Valley Business Conditions Index has moved down, but still points to strong growth in the next three to six months.

“The region is currently experiencing solid manufacturing growth with combined upturns in regional construction,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State. “However, as in past months, durable, or heavy manufacturing, continues to lag behind non-durable manufacturing, including food processing.”

The index is a leading economic indicator from a survey of individuals making company purchasing decisions for firms in the the counties of Fresno, Kings, Madera and Tulare. The index is produced using the same methodology as that of the national Institute for Supply Management.

After moving below neutral growth for December, the employment gauge has climbed above the threshold every month since. The August index declined to a still healthy 57.9 percent from July’s record high of 63.2 percent.

“Over the past 12 months, the San Joaquin [Valley] region has experienced strong and improving job growth at 2.1 percent,” Goss said, “which is well above the pace of the nation’s 1.5 percent.”

The prices-paid index, which tracks the cost of purchased raw materials and supplies slipped to 70.2 percent from 71.2 percent in July, indicating modest but elevated pressures nationally at the wholesale level.

Looking ahead six months, economic optimism, as captured by the business confidence index, slipped to 65.3 percent from July’s 70 percent.

In another show of economic confidence, the inventory index remained above neutral growth for August. The August inventory declined to 52.3 percent from 54.5 percent in July. The export index fell to 46.9 percent from 53.8 percent in July. Meanwhile, the import index dropped to 41.9 percent from July’s 48.1 percent.