For the 10th consecutive month, the San Joaquin Valley Business Conditions Index remained above the 50.0 threshold, pointing to economic growth for the next three to six months. The overall September index grew to 58.5 from 57.6 in August.
About 28 percent of survey participants indicated the drought was having a negative impact on their business operations. This is down from last month when 35.3 reported the drought was negatively influencing their firm.
“Despite the severity of the drought, it appears that its negative impact on the regional economy remains significant but has diminished a bit from last month. Even with drought conditions, business activity was healthy for the month, especially for non-durable goods manufacturers including food processors,” said Dr. Ernie Goss, research faculty with Fresno State’s Craig School of Business.
The index, produced by the Craig School, is a leading economic indicator from a survey of individuals making company purchasing decisions in the counties of Fresno, Madera, Kings and Tulare.
The index uses the same methodology as that of the national Institute for Supply Management.
Other survey findings:
- Employment: After moving below growth neutral for January, the hiring gauge has moved above the 50.0 threshold for the past eight months. But the job index slid to 54.9 from August’s 57. “The region is adding jobs at a very healthy pace, but I expect the pace to slow for the final quarter of 2014,” Goss said. “Non-durable goods manufacturers, including food processors, added jobs at a healthy pace for the month even as construction job growth slowed. Average weekly earnings for the region expanded by a healthy 3.9 percent and well above inflation.”
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, declined to a level indicating only modest inflationary pressures at the wholesale level. The wholesale inflation gauge slumped to 59.4 from 66 in August.
- Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, declined to 57.1 from 58.6 in August.
- Inventories: Businesses increased inventories of raw materials and supplies for the month but at a slow pace. The September inventory reading climbed to 51.5 from last month’s below growth neutral 47.2.
- Trade: The new export order index advanced briskly to 55.1 from August’s much weaker 43.6 while the import index fell from 52.4 in August to 48.9 for September. The stronger U.S. dollar, which makes U.S. goods less competitively priced abroad and foreign goods more attractively priced in the U.S., did not have the expected negative impact on exports for the month.
- Other components: Other components of the September Business Conditions Index were new orders at 68.7, down from 61.0 in August; production or sales at 61.2, down from August’s 66.6; and delivery lead time at 55.9, down slightly from 56.2 in August.
For more information, contact Goss at 559.278.2352.