Last month’s San Joaquin Valley Business Conditions Index dipped slightly from June’s reading but continues to point toward economic growth. The overall index in July fell to a healthy 57.1 from June’s 58.3, but remains firmly above the 50.0 growth neutral threshold indicating 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.

“Both durable goods and non-durable goods manufacturers in the area continue to expand at a healthy pace. Wholesale trade firms are experiencing solid growth,” said Dr. Ernie Goss, research faculty with the Craig School. “As a result of solid job gains, the region’s unemployment rate now stands at its lowest level in seven years.”

This month, business leaders and supply managers were asked how a September 2015 Federal Reserve rate hike would affect their firms. “Almost one-third, or 31.3 percent expect negative impacts from a rate increase, while the remaining 68.7 percent expect little or no affects from an interest rate hike in September,” Goss said.

Other survey findings:

  • Employment: The hiring gauge has remained above the 50.0 threshold since October 2013. In July the index declined to a still healthy 54.8 from 62.6 in June.
  • Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, expanded from 46.4 in April to 55.0 in May. This indicates only modest inflationary pressures at the wholesale level.
  • Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, fell to 56.8 from June’s 60.2. According to Goss, the San Joaquin Valley inflationary gauge is tracking the same as the national survey, remaining in a rage indicating only modest inflationary pressures at the wholesale level.
  • Inventories: Businesses increased inventories of raw materials and supplies for the month at a slower pace than June. The June inventory reading sank to 52.1 from last month’s 57.5.
  • Trade: The new export order index fell to a weaker 42.7 from June’s 49.1 and the import index increased to a 52.2 from 49.8 in June. Goss said that while the strong U.S. dollar has made goods less competitively priced abroad, regional growth has boosted imports for businesses in the four county region.
  • Other components: Other components of the June business conditions index were: new orders at 61.5, up from 56.2 in June; production or sales at 62.7, up from June’s 56.6; and delivery lead time at 54.3, down from 58.6 in June.

For more information, contact Goss at 559.278.2352.

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