Written by The Business Journal Staff
Despite dipping from last month’s reading, for the 27th consecutive month, the February 2016 San Joaquin Valley Business Conditions Index points to continued growth, according to its author.
Produced by the Craig School of Business at Fresno State, the index slipped to 54.8 in February, down from 58.8 in January. An index greater than 50.0 indicates an expansionary economy over the next three to six months.
“According to our survey results over the last several months, economic growth will remain positive in the months ahead and slightly above that of the nation’s economy,” said Dr. Ernie Goss, research faculty with the Craig School and author of the monthly guide.
“As in January, growth slowed for manufacturers while construction firms reduced jobs for the month,” Goss added. “On the other hand, wholesale trade and business services firms continue to experience healthy growth.”
February survey participants were asked to name the greatest challenge facing their business for 2016. More than 38 percent see U.S. economic weakness as the biggest 2016 economic challenge, while 23 percent named rising government regulation as their most significant business threat. Sixteen percent indicated that finding and hiring qualified workers would be the greatest challenge.
The table is a leading economic indicator from a survey of individuals making company purchasing decisions in Fresno, Madera, Kings and Tulare counties.
The index uses the same methodology as that of the national Institute for Supply Management.
After slumping below growth neutral in October of 2013, the index’s regional hiring gauge has moved above the 50.0 threshold each month since. The employment index sank to 54.1 from 58.3 in January. According to Goss, job growth in the San Joaquin Valley has moved a bit lower, but remains above the pace of the nation.
The prices-paid index, which tracks the cost of purchased raw materials and supplies, fell to 42.9 from January’s 44.1. Goss said falling agriculture and energy prices are putting downward pressure on the San Joaquin Valley wholesale inflationary gauge.
Looking ahead six months, economic optimism, as captured by the business confidence index, plummeted to 41.9 from January’s weak 45.3.
Businesses expanded inventories of raw materials and supplies for February, but at a slower pace than in January. The February inventory index slipped to 55.8 from 57.4 in January.
New export orders fell again, but at a slower pace than in January. The index rose to 48.5 from January’s 38.6, and the import index climbed to 52.3 from 49.1 in January.
Other components of the January Business Conditions Index saw new orders at 53.7, down from January’s 61.5; production or sales at 56.1, down from 62.2 in January; and delivery lead time at 54.2, down from last month’s 54.6.