December marked the 12th time in 13 months the overall San Joaquin Valley Business Conditions Index has remained above the 50.0 threshold. The index, produced by Fresno State’s Craig School of Business, is a leading economic indicator from a survey of individuals making company purchasing decisions in the counties of Fresno, Madera, Kings and Tulare.
The December index expanded to 52.8 from 48.6 in November. An index of greater than 50 indicates an expansionary economy over the course of the next three to six months.
“As a result of continuing economic uncertainty, companies in the area continue to expand output via temporary hiring. Firms in wholesale trade, food processing and business services are expanding economic activity. Construction activity continues to expand at a steady but slow pace,” said Dr. Ernie Goss, research faculty with the Craig School of Business.
The index uses the same methodology as that of the national Institute for Supply Management.
Other survey findings:
- Employment: For 14 months the hiring gauge remained above the growth neutral threshold, advancing to 54.0 from 52.4 in November.
- Wholesale prices: The prices-paid index, which tracks the cost of raw materials and supplies, rose to 60.2 in December from 58.0 in November. According to Goss, inflationary pressures at the wholesale level remain contained, but 39 percent of survey respondents expect higher prices for raw materials and supplies to be a risk factor in 2014.
- Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, soared to 54.2 from November’s 44.9.
- Inventories: Businesses once again reduced inventories of raw materials and supplies for the month. However, the inventory index remains below the growth threshold expanding to 46.1 from 40.0 in November.
- Trade: The new export order reading jumped to a healthy 57.0 from November’s weak 45.0, but the import reading for December slipped to 50.6 from last month’s 51.2.
- Other components: Other components of the November Business Conditions Index were new orders at 53.3, up from 44.2 last month; production or sales at 53.9, up from 48.9 in November; and delivery lead time at 56.7, down from 57.4 in November.
For more information, contact Goss at 559.278.2352.