The San Joaquin Valley Business Conditions Index continued in a range that points to strong growth in the next three to six months.
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.
“This is the 13th straight month that the overall index has moved above growth neutral,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State. “This month, we tracked weakness among non-durable goods producers, including food processors. However, gains for durable goods manufacturers more than offset this weakness.”
Employment: After moving below growth neutral for December, the employment gauge has climbed above the threshold every month since. The September index declined to a solid 54.0 from 57.9 in August. “Over the past 12 months, the San Joaquin region has experienced strong and improving job growth at 1.8 percent, which is well above the pace of the nation’s 1.3 percent,” reported Goss.
Wholesale Prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, climbed to 73.4 from 70.2 in August, indicating elevated inflationary pressures at the wholesale level. “I expect inflationary pressures at both the consumer and wholesale level to rise in the months ahead. As a result, I expect the Federal Reserve to raise short-term interest rates by one-fourth of one percentage point before the end of 2017,” Goss said.
Business Confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, rose to a 68.8 from August’s 65.3.
Inventories: In another show of economic confidence, the inventory index remained above growth neutral for September. The September inventory advanced to 56.5 from 52.3 in August.
Trade: The new export orders index expanded to 52.0 from 46.9 in August while the import index climbed to 54.3 from August’s 41.9.
Other components: New orders were at 59.7, down from 60.5 in August; production or sales were at 63.3, up from August’s 62.8; and delivery lead time was at 58.8, down from last month’s 61.4.
For more information, contact Goss at 559.278.2352.