FRESNO — The latest San Joaquin Valley Business Conditions Index fell to a solid 55.7 from December’s 59.1., signaling continued healthy growth in the next three to six months.
The index remained above growth neutral for the 17th straight month.
“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 California State University, Fresno.
The index is a leading economic indicator from a survey of individuals making company purchasing decisions for firms in the counties of Fresno, Kings, Madera and Tulare. The index is produced using the same methodology as that of the national Institute for Supply Management.
- Employment: For the first time since December 2016, the employment gauge sank below growth neutral. The January index slumped to 45.0 from 53.6 in December. “Over the past 12 months, the San Joaquin region has experienced strong job growth at 2.7 percent, or almost double that of the U.S.” Goss said.
- Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, dipped to 80.6 from 83.3 in December, 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 15 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 69.1 from December’s 70.1.
- Inventories: In another show of economic confidence, the inventory index remained above growth neutral for January. The January inventory fell to a healthy 58.8 from December’s even stronger 62.6.
- Trade: The new export orders index increased to a weak 35.0 from December’s 30.0, while the import index fell to 64.0 from 69.7 in December.
- Other components: Other components of the December Business Conditions Index were: new orders at 51.0, down from 52.0 in December; production or sales at 61.0, down from 61.9 in December; and delivery lead time at 62.7, down from last month’s 65.4.