San Joaquin Valley Economic Index falls to 19-month low but remains in positive range
FRESNO — The San Joaquin Valley’s economy hit its lowest reading in 19 months but continued to remain in a healthy range with indicators of slow, but continued growths in the coming 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.
“For a fourth consecutive month, the survey tracked weakness among non-durable goods producers, except for food processors. However, gains for durable goods manufacturers more than offset weakness among non-durable goods producers,” said Dr. Ernie Goss, research faculty with the Craig School of Business at Fresno State.
February’s index fell to 50.5 from January’s 55.7, remaining above growth neutral for the 18th straight month but dropping to its lowest reading since August 2016. The index points to weaker, but positive growth in the next three to six months.
Employment: For second straight month, the employment gauge sank below growth neutral. The February index slumped to 40.7 from January’s 45.0. “Despite the downturn in our survey, the San Joaquin [Valley] has experienced strong job growth at 2.7 percent over the past 12 months, or almost double the nation’s 1.5 percent expansion. I consider the last two months as outliers for the region with job growth likely to continue for 2018,” Goss said.
Wholesale Prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, dipped to a robust 77.8 from 80.6 in January, 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. Moreover, I expect the Federal Reserve to raise short-term interest rates at their March 21 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, dipped to a still robust 66.4 from January’s 69.1.
Inventories: In another show of economic confidence, the inventory index remained above growth neutral for February. The February inventory fell to a solid 54.4 from January’s 58.8, indicating growth in inventories but at slower pace than for January.
Trade: The new export orders index increased to a weak 47.5 from January’s 35.0, while the import index fell to 61.2 from 64.0 in January.