The December San Joaquin Valley Business Conditions Index slipped from November’s record high, but points to growth for the next six months. For the 13th consecutive month the overall index remains above the 50.0 growth neutral threshold at 55.0 for December, down from 59.9 in November.
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.
“Much like the national economy, the San Joaquin Valley economy is expanding at an improving pace and based on our survey results is expected to continue to grow at a healthy pace for the first half of 2015,” 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.
Goss points to improved employment as a driver of the growth. “Even though the region’s unemployment rate is almost twice that of the nation, the jobless rate continues to move lower. I expect the unemployment rate to continue to decline through the first half of 2015,” Goss said.
Other survey findings:
- Employment: After slumping below growth neutral for October, the hiring gauge has climbed from 51.3 in November to 54.5 in December. Only 15 percent of businesses expect layoffs in the first half of 2015. This is down significantly from this time last year when the same question was asked. Additionally, businesses expect a 2.4 percent wage gain for 2015, which is up from a 1.3 percent increase predicted for 2014.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, dropped to 59.9 from 62.1 in November. This indicates only modest inflationary pressures at the wholesale level.
- Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, soared to 64.1 from 55.1 in November.
- Inventories: Businesses increased inventories of raw materials and supplies for the month at a much slower pace. The December inventory reading sank to 51.9 from last month’s 62.8.
- Trade: The new export order index slid to 46.3 from 48.8 in November and the import index declined to 38.6 from 48.6 in November.
- Other components: Other components of the December Business Conditions Index were: new orders at 45.3, down from 59.7 in November; production or sales at 61.6, down from 69.2; and delivery lead time at 61.7, up from 56.7.
For more information, contact Goss at 559.278.2352.