Business confidence boosts Valley economic index to highest level since 2015

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  • Sid Craig School of Business

Business confidence boosts Valley economic index to highest level since 2015

The San Joaquin Valley Business Conditions Index started 2017 on a positive note, soaring to its highest level since April 2015. The January index jumped to 59.5, up from December’s 54.5. 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 past summer, the index has now moved above growth neutral for five straight months,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State. “The region is currently experiencing manufacturing growth combined with upturns in regional construction. Furthermore, growth was recorded in wholesale trade and distribution.”

The index, produced by Fresno State’s 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: After moving below growth neutral for December, the employment gauge climbed above the 50.0 threshold. The January index advanced to 53.3 from 49.0 in December. “Over the past 12 months, the San Joaquin region has experienced job growth of 1.6 percent, which is a bit above the pace of the nation of 1.5 percent. Our surveys over the last several months indicate that the San Joaquin Valley job market will continue to expand at a pace slightly above that of the nation for the first half of 2017,” Goss said.
  • Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, climbed to 60.4 from 54.2 in December, indicating rising, but not excessive, inflationary pressures at the wholesale level. Goss expects inflationary pressures to increase, with at least one rate hike in the first quarter of 2017. Almost one-third of survey participants expect a quarter one rate to have a negative impact on their businesses.
  • Business confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, rose to very strong 70.6 from December’s 64.4.
  • Inventories: In another show of economic confidence, businesses increased inventories of raw materials and supplies for January. The January inventory climbed to 65.1 from 62.0 in December.
  • Trade: The new export orders index moved above growth neutral for January. The index expanded to 54 from 50.8 in December. The import index advanced to 56.7 from 49.1 in December.
  • Other components: Other components of the January Business Conditions Index were: new orders at 62.1, up from 54.9 in December; production or sales at 65.9, up from December’s 54.9; and delivery lead time at 50.9, down from last month’s 51.8.

For more information, contact Goss at 559.278.2352.

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