Last month’s San Joaquin Valley Business Conditions Index fell from April’s reading but nonetheless continues to point toward economic growth. The overall index in May slipped to 55.0 from April’s 59.9, but remains firmly above the 50.0 growth neutral threshold indicating 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. The index uses the same methodology as that of the national Institute for Supply Management.
“Manufacturers, both durable and non-durable, added jobs at a solid pace while wholesale trade experienced upturns in economic activity. Survey results for the San Joaquin Valley continue to be much stronger than comparable U.S. numbers,” said Dr. Ernie Goss, research faculty with the Craig School.
Goss said the index shows healthy hiring across a broad range of industries. “The region’s unemployment rate is down by more than 2 percent from this time last year. Importantly, we are now tracking job additions for area manufacturers. Based on our survey, I expect the jobless rate to move lower over the next three to six months.”
Other survey findings:
- Employment: The hiring gauge has remained above the 50.0 threshold since October 2013. In May the index declined to a still healthy 59.7 from 64.9 in April.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, expanded from 46.4 in April to 55.0 in May. This indicates only modest inflationary pressures at the wholesale level.
- Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, fell to 54.3 from April’s 58.7. Goss points to lower fuel prices and an expanded regional economy as drivers keeping business confidence above the growth neutral threshold.
- Inventories: Businesses increased inventories of raw materials and supplies for the month at a slower pace than April. The May inventory reading declined to 53.5 from last month’s 56.9.
- Trade: The new export order index fell to a weaker 43.2 from April’s 50.6 and the import index increased to a weak 44.0 from 38.0 in April. Goss said the strong U.S. dollar, which makes U.S. goods less competitively priced abroad, is negatively affecting regional exports.
- Other components: Other components of the May Business Conditions Index were: new orders at 50.8, down from 56.1 in April; production or sales at 51.6, down from April’s 57.6; and delivery lead time at 59.6, down from 64.2 in April.
For more information, contact Goss at 559.278.2352.