The San Joaquin Valley Business Conditions Index rose for the third time in the past four months. The overall June index climbed to 58.3 from May’s 55.0, indicating healthy growth into the fourth quarter of this year. An index of greater than 50.0 indicates an expansionary economy over the next three to six months.

The index, produced by Fresno State’s Craig School of Business, 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.

“Non-durable goods manufacturers, including food processors, continue to experience healthy business growth. Monthly survey results for the San Joaquin Valley continue to be much stronger than comparable U.S. numbers,” said Dr. Ernie Goss, research faculty with the Craig School.

Goss said the index shows positive hiring numbers. “Hiring was healthy across a broad range of industries in the area — from food processors to wholesale trade. The region’s unemployment rate remains above the U.S. rate, but is trending downward at a solid pace. Based on our survey, I expect the jobless rate to move even lower over the next three to six months,” he said.

Other survey findings:

  • Employment: The hiring gauge has remained above the 50.0 threshold since October 2013. In June the employment index jumped to 62.6 from 59.7 in May.
  • Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, expanded from 55.0 in May to 60.2 in June. This indicates only modest inflationary pressures at the wholesale level.
  • Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, slipped to 54.1 from May’s 54.3. Goss said the state drought continues to restrain business confidence in the region.
  • Inventories: Businesses increased inventories of raw materials and supplies for the month at a faster pace than in May. The June inventory reading expanded to 57.5 from last month’s 53.5.
  • Trade: The new export order index advanced to a weak 49.1 from May’s 43.2 and the import index increased to a frail 49.8 from 44.0 in May. Goss said the strong U.S. dollar, which makes U.S. goods less competitively priced abroad, is negatively affecting regional exports. But he expects the import reading to advance in the months ahead.
  • Other components: Other components of the June Business Conditions Index were new orders at 56.2, up from 50.8 in May; production or sales at 56.6, up from May’s 51.6; and delivery lead time at 58.6, down from 59.6 in May.

For more information, contact Goss at 559.278.2352.

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