For the second straight month, the San Joaquin Valley Business Conditions Index was in a range pointing to solid growth in the next three to six months. The October index improved to 55.6 from 55.0 in September. This is the highest reading since March. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.
“After three straight months with readings below growth neutral, the index has now moved above growth neutral for two straight months. The region experienced positive growth in the manufacturing sector, food processing companies detailed strong growth and expansion was recorded in wholesale trade and distribution,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State. “On the other hand, construction firms and information technology companies in the region experienced little change from September’s economic activity levels.”
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: For a fourth straight month, the hiring gauge was at or above the growth neutral 50.0 threshold. The employment index slipped to 55.8 from September’s 56.8. Over the past 12 months, the region has experienced job growth of more than 3 percent, which Goss said is almost triple the pace of the nation.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, rose to 58.6 from 55.4 in September.
- Business confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, fell to 42.2 from September’s 44.5. Goss said that weak U.S. and global growth are negatively affecting confidence among local businesses.
- Inventories: Businesses increased inventories of raw materials and supplies for October. The October inventory climbed to 55.7 from 51.9 in September.
- Trade: The new export orders index remained below growth neutral for October. The index increased to 45.9 from 36.9 in September. The import index stood at 46.5, which was up from 43.0 in September.
- Other components: Other components of the October Business Conditions Index were: new orders at 55.8, up from 53.3 in September; production or sales at 57.6, up from September’s 56.8; and delivery lead time at 53.0, down from last month’s 56.0.
For more information, contact Goss at 559.278.2352.