The June San Joaquin Valley Business Conditions Index points to growth for the 18th time in the past 19 months, despite slipping slightly from May. The overall index dipped to 57.0 from 57.4 last month. An index of greater than 50 indicates an expansionary economy over the course of the next three to six months.
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.
“Construction activity continues to improve in the region, spilling over into the broader economy,” said Dr. Ernie Goss, research faculty with the Craig School. “Additionally, expansions among wholesale trade firms boosted June readings. Accordingly, our surveys over the past several months indicate that overall growth will remain healthy for the next three to six months.”
The index uses the same methodology as that of the national Institute for Supply Management.
Other survey findings:
- Employment: After sliding below growth neutral for January, the hiring gauge has stayed at or above the 50.0 threshold for the past five months. In June the job index declined to a still healthy 57.8 from 58.8 in May. According to Goss, there are more workers on business payrolls in the region than ever before and the region is adding jobs at a very healthy annual pace, but a large share of the added jobs is temporary.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, declined for the second straight month. The wholesale inflation gauge fell to 69.8 from 71.4. On average, business leaders in our survey expect prices to rise by 3.3 percent in the next six months, or about 6.6 percent annually.
- Business confidence: Looking ahead six months, economic optimism slipped to a still solid 55.6 for June, down from last month’s 56.2.
- Inventories: Businesses expanded inventories of raw materials and supplies for the month but at a slower pace than in April. The June inventory reading sank to 53.9 from May’s 57.8.
- Trade: The new export order fell to 48.2 from May’s 55.5. Goss said the reading is discouraging given the important contribution that sales abroad make to regional growth. The regional import reading for June slid to 53.1 from 56.2 in May.
- Other components: Other components of the June Business Conditions Index were new orders at 55.6, down from May’s 58.6; production or sales at 58.3, up from May’s 52.9; and delivery lead time at 59.3, up slightly from last month’s 59.1.
For more information, contact Goss at 559.278.2352.
- Craig School of Business
- Institute for Supply Management
- Video of June report
- Follow Goss: www.twitter.com/erniegoss, www.ernestgoss.com or http://economictrends.blogspot.com