The San Joaquin Valley Business Conditions Index has advanced into a range pointing to positive 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 20th 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. “Both durable and non-durable goods manufacturing reported solid gains for the month. Food processing continues to be a major contributor to regional growth. As in recent months, construction and wholesale trade activity in the San Joaquin Valley continued to expand at a healthy pace. I expect this pace to remain strong for the next three to six months.”
Employment: The employment gauge moved to 54.6 from 50.6 for March. “The San Joaquin region has experienced strong job growth at 2.9 percent over the past 12 months, or almost double the nation’s 1.5 percent expansion over the same period of time. I expect the region to continue to add jobs, but at a somewhat slower pace for the next three to six months,” Goss said.
Wholesale Prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, declined for a third consecutive month to 73.3 from 77.1 in March, but still indicated elevated inflationary pressures at the wholesale level. “I expect inflationary pressures at both the consumer and wholesale level to rise in the months ahead. Moreover, I expect the Federal Reserve to raise short-term interest rates at their June meetings by one quarter of one percentage point (25 basis points),” Goss said.
Business confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, declined to a still strong 65.9 from March’s 69.3.
Inventories: The inventory index remained above growth neutral for April. However, inventories grew at a slower pace with an index of 52.8, down from March’s solid 55.5 and from February’s 54.4.
Trade: The new export orders index advanced to 52.2 from 46.0 in March, while the import index expanded to 57.5 from 52.8 in March.
Other components: Other components of the April Business Conditions Index were: new orders at 61.5, up from 51.9 in March; production or sales at 61.6, up from March’s 51.6; and delivery lead time at 58.5, up from last month’s 57.8.
For more information, contact Goss at 559.278.2352.
(University Communications news intern Yesenia Candelaria contributed to this report.)
Goss video economic summary: www.youtube.com/watch?v=q1_bhU-tk1o
Craig School of Business: www.fresnostate.edu/craig/ubc/sjvs.html