Last month’s San Joaquin Valley Business Conditions Index fell to its lowest level since November 2012 but continues to point to overall economic growth. The overall index in April sank to 50.4 from 57.2 in March, 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.
“According to our survey results over the past several months, economic growth will remain positive but somewhat weaker in the months ahead,” said Dr. Ernie Goss, research faculty with the Craig School. “As it did in February, growth slowed for durable goods manufacturers. On the other hand, food processors, wholesale trade and business services firms continue to experience healthy growth.”
Goss said the index shows slight job losses for the month. “Gains for construction and manufacturing were more than offset by losses for firms with tight linkages to agriculture and international markets,” he said.
Other survey findings:
- Employment: For the first time since October 2013, the regional hiring gauge fell below the growth neutral 50.0 threshold. The employment index slumped to 49.4 from 57.8 in March.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, advanced to 51.7 from March’s 48.9. The findings indicate little evidence of inflationary pressures at the wholesale level.
- Business confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, expanded to a frail 48.9 from March’s 47.9.
- Inventories: Businesses expanded inventories of raw materials and supplies for April, but at a slower pace than for March. The April inventory index sank to 59.8 from 69.6 in March.
- Trade: New export orders fell again for April. The index sank to 30.4 from March’s 44.2, and the import index slipped to 53.1 from 56.2 in March.
- Other components: Other components of the April Business Conditions Index were: new orders at 46.4, down from March’s 51.8; production or sales at 44.4, down from 56.9 in March; and delivery lead time at 52.1, up from last month’s 49.6.
For more information, contact Goss at 559.278.2352.