The San Joaquin Valley Business Conditions Index climbed to a solid 58.7 from 58.1 in May, moving into a range that points to strong growth in the next three to six months.
“The region is currently experiencing solid manufacturing growth combined with upturns in regional construction,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State. “However, as in past months, durable, or heavy manufacturing, continues to lag behind non-durable manufacturing, including food processing.”
The index is a leading economic indicator from a survey of individuals making company purchasing decisions for firms in the counties of Fresno, Kings, Madera and Tulare. The index is produced using the same methodology as that of the national Institute for Supply Management.
Employment: After moving below growth neutral for December, the employment gauge climbed above the threshold every month since. The June index advanced to 60.8 from May’s 59.6. “Over the past 12 months, the San Joaquin [Valley] region has experienced strong and improving job growth at 2.2 percent, which is well above the pace of the nation’s 1.6 percent. The region’s rapid expansion is boosting average hourly salaries and wages at a very strong and unsustainable pace of 7 percent. Our surveys over the last several months indicate that the San Joaquin job market will continue to expand at a pace above that of the nation through the third quarter of 2017,” Goss said.
Wholesale Prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, advanced to 67.3 from 65.4 in May, indicating modest but elevated inflationary pressures at the wholesale level. “I expect inflationary pressures at both the consumer and wholesale level to move higher in the months ahead with an additional Federal Reserve rate hike at their September meeting,” Goss said. On average, companies in the area expect to raise prices by 1.9 percent over the next 12 months.
Business Confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, slipped to a strong 69.1 from May’s 72.6.
Inventories: In another show of economic confidence, the inventory index remained in a healthy range for June. The June inventory rose to 59.0 from 54.4 in May.
Trade: The new export orders index fell to 47.7 from 53.7 in May while the import index advanced to 54.5 from May’s 53.7.
Other components: Other components of the June Business Conditions Index were: new orders at 57.0, down from 60.5 in May; production or sales at 66.1, up from May’s 62.3; and delivery lead time at 51.1 down from last month’s 56.0.
For more information, contact Goss at 559.278.2352.
Craig School of Business: http://www.fresnostate.edu/craig/ubc/sjvs.html
Goss video economic summary: https://youtu.be/teeSeQ1VNNM