For the 15th consecutive month, the San Joaquin Valley Business Conditions Index points to growth despite being in its third month of decline. The February index reached a record high of 59.9 in November, but slipped to 52.9 in February, down from 54.0 in January. An index greater than 50.0 indicates an expansionary economy over the next three to six months.
“Much like the national economy, the San Joaquin Valley economy is expanding at a solid pace. Based on our surveys over the past several months, that growth should remain positive for the next three to six months,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State.
This month, businesses in the area reported on the impact of the West coast dock disputes. About 27 percent of firms reported negative impacts on sales as a result of the disputes. About 55 percent of firms reported negative impacts on company purchases of inputs and raw materials and supplies from the disputes.
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: The region’s hiring gauge remained above growth neutral, despite slipping to 51.1 in February from 52.3 in January. Goss points to the shipping issues as a cause of the decline. “Due to shipping issues tied to West coast dock disputes, firms expanded employment at a much slower pace in February. The recent settlement of the dock labor issue will put the region back on a healthier employment growth path,” Goss said.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, slid below growth neutral to 47.9 from 54.9 in January. Goss does not expect deflation or declining wholesale prices, but believes the inflation reading will trend lower in upcoming months.
- Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, sank to 54.8 from January’s much stronger 64.2.
- Inventories: Businesses increased inventories of raw materials and supplies for the month. The February inventory reading grew to 56.0 from last month’s 52.9.
- Trade: The new export order index soared to 66.8 from 41.9 in January, and the import index slumped to 40.9 from 44.3 in January.
- Other components: Other components of the February Business Conditions Index were: new orders at 45.6, down slightly from 45.7 in January; production or sales at 51.5, down from January’s 57.6; and delivery lead time at 60.4, down from 61.6 in January.
For more information, contact Goss at 559.278.2352.