Valley economic index points to healthy growth into 2016

FRESNO

October 7, 2015 1:19pm

• Growth slowed in September for manufacturers and construction firms

• “Warehousing, wholesale trade firms and business services are experiencing healthy growth”

Positive and solid economic growth is being predicted into 2016 for the four counties at the heart of the San Joaquin Valley by Fresno State’s Craig School of Business.

Its San Joaquin Valley Business Conditions Index climbed to 55.0 in September from August’s reading of 53.9. 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. Readings above the 50.0 growth neutral threshold indicate an expansionary economy over the next three to six months. “While growth slowed in September for manufacturers and construction firms in the area, warehousing, wholesale trade firms and business services are experiencing healthy growth. The overall index over the last several months indicates that economic growth will remain healthy in the months ahead,” says Ernie Goss, research faculty with the Craig School.

Mr. Goss says the drought continues to affect the region’s economy. The index shows more than a quarter of respondents reported negative economic impacts from the drought. Other survey findings:

• Employment

After slumping below growth neutral in October of 2013, the regional hiring gauge has moved above the 50.0 threshold each month since. The employment index fell to a solid 53.7 from 54.1 in August.

• Wholesale prices

The prices-paid index, which tracks the cost of purchased raw materials and supplies, rose slightly to 49.9 from 49.8 in August.

• Business confidence

Looking ahead six months, economic optimism, captured by the business confidence index, declined to 51.8 from August’s 53.5. Mr. Goss says sinking commodity prices and global economic weakness pushed expectations of future economic conditions lower for the month.

• Inventories

Businesses increased inventories of raw materials and supplies for September, but at a slower pace than for August. The September inventory fell to 51.5 from last month’s 53.5.

• Trade

The new export order index sank to 40.1 from 42.8 in August, and the import index advanced to 53.3 from 51.1 in August. The strong U.S. dollar, which makes U.S. goods less competitively priced abroad, and global economic weakness are negatively affecting regional exports. But Mr. Goss says the healthy San Joaquin Valley economy is boosting imports into the four-county region.

• Other components

Other components of the September Business Conditions Index were: new orders at 55.6, up from 54.0 in August; production or sales at 61.5, up from 56.4; and delivery lead time at 52.8, up from last month’s 52.2.

http://www.centralvalleybusinesstimes.com/stories/001/?ID=29206