For the 14th consecutive month the overall San Joaquin Valley Business Conditions Index remains above the 50.0 growth neutral threshold at 54.0 for January. An index greater than 50.0 indicates an expansionary economy over 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.

“Much like the national economy, the San Joaquin Valley economy is expanding at an improving pace. Based on our survey results, it 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.

The index uses the same methodology as that of the national Institute for Supply Management.

Survey participants in January were asked to identify the biggest economic challenge facing their firm for 2015. More than one-third named higher regulatory costs as the greatest 2015 challenge while 21.4 percent reported that declining customer demand was the largest potential obstacle for their firm in 2015.

Other survey findings:

  • Employment: The hiring gauge has slipped to 52.3 from 54.5 in December. Only 15 percent of businesses expect layoffs in the first half of 2015. The region is adding jobs at an annual pace approaching 3.0 percent, which Goss said is healthy by historical standards. “Job additions for business services, engineering and information technology more than offset pullbacks in manufacturing jobs. I expect the unemployment rate to continue to decline through the first half of 2015.”
  • Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, slumped to 54.9 from 59.9 in December. This indicates declining inflationary pressures at the wholesale level. Survey participants on average expect prices at the wholesale to grow by 2.5 percent in 2015. This is up from the 1.2 percent gain at the national level in 2014.
  • Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, grew slightly to 64.2 from 64.1 in December.
  • Inventories: Businesses increased inventories of raw materials and supplies for the month. The January inventory reading increased to 52.9 from 51.9 in December.
  • Trade: The new export order index slid to 41.9 from 46.3 in December and the import index rose to a weak 44.3 from 38.6 in December.
  • Other components: Other components of the January Business Conditions Index were: new orders at 45.7, down from 45.3 in December; production or sales at 57.6, down from December’s 61.6; and delivery lead time at 61.6, down slightly from 61.7 in December.

For more information, contact Goss at 559.278.2352.

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