The October San Joaquin Valley Business Conditions Index fell to 52.8 from 55.0 in September, but remains over the 50.0 growth neutral threshold indicating economic expansion into 2016.

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. Readings above the 50.0 growth neutral threshold indicate an expansionary economy over the next three to six months.

“According to our survey results over the last several months, economic growth will remain positive but slow in the months ahead. As in September, growth slowed for manufacturers and construction firms. On the other hand, wholesale trade firms and business services are experiencing healthy growth,” said Dr. Ernie Goss, research faculty with the Craig School.

Other survey findings:

  • Employment: After slumping below growth neutral in October of 2013, the regional hiring gauge has moved above the 50.0 threshold each month since.  The employment index advanced to a healthy 55.7 from 53.7 in September. Goss said that the regional economy has experienced a very strong 3.2 percent growth in the past year, but surveys over the last several months indicate that this growth will remain at a positive but somewhat slower pace.
  • Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, rose to 52.2 from last month’s 49.9.
  • Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, increased to 52.8 from September’s 51.8. Goss said that sinking agriculture and energy commodity prices, as well as global economic weakness, continue to weigh on expectations of future economic conditions.
  • Inventories: Businesses reduced inventories of raw materials and supplies for October. The inventory index slipped from last month’s 51.5 to 48.5 for October.
  • Trade: The new export order index plummeted to 32.6 from September’s already weak 40.1, and the import index slipped to 51.6 from 53.3 in September. Goss said the strong U.S. dollar, which makes U.S. goods less competitively priced abroad, and global economic weakness are negatively affecting regional exports. On the other hand, he said, a growing San Joaquin economy is boosting imports into the four-county region.
  • Other components: Other components of the October Business Conditions Index were new orders at 48.3, down from 55.6 in September; production or sales at 55.8, down from September’s 61.5; and delivery lead time at 55.9, up from last month’s 52.8.

For more information, contact Goss at 559.278.2352.

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