Valley Economic Index shows slight dip from record July, but employment growth in the Valley outpaces the national average
FRESNO – Regional indicators show that the San Joaquin Valley’s economy declined last month, but only in comparison to a record July but job growth remains above the national average and points to strong growth in the next three to six months.
The trends were identified in the San Joaquin Valley Business Conditions Index. Produced monthly by Fresno State’s Craig School of Business, the index 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.
“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.”
-Employment: After moving below growth neutral for December, the employment gauge has climbed above the threshold every month since. The August index declined to a still healthy 57.9 from July’s record high of 63.2.
“Over the past 12 months, the San Joaquin [Valley] region has experienced strong and improving job growth at 2.1 percent, which is well above the pace of the nation’s 1.5 percent,” Goss said.
-Wholesale Prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, slipped to 70.2 from 71.2 in July, indicating modest but elevated inflationary pressures at the wholesale level.
“I expect inflationary pressures at both the consumer and wholesale level to moderate in the months ahead. As a result, I expect the Federal Reserve to delay another rate hike until the end of the fourth quarter of 2017, or first quarter of 2018,” Goss said.
-Business Confidence: Looking ahead six months, economic optimism, as captured by the business confidence index, slipped to 65.3 from July’s 70.0.
-Inventories: In another show of economic confidence, the inventory index remained above growth neutral for August. The August inventory declined to 52.3 from 54.5 in July.
-Trade: The new export orders index fell to 46.9 from 53.8 in July while the import index dropped to 41.9 from July’s 48.1.
-Other components: Other components of the August Business Conditions Index were: new orders at 60.5, down from 67.1 in July; production or sales at 62.8, down from July’s 71.7; and delivery lead time at 61.4, up from last month’s 57.4.
-Fresno State University Communications news intern Yesenia Candelaria contributed to this report.