Written by The Business Journal Staff
The San Joaquin Valley Business Conditions Index declined slightly in July, but still indicates healthy economic growth over the next three to six months.
The index is a leading economic indicator from a survey of individuals making purchasing decisions for firms in the counties of Fresno, Kings, Tulare and Madera.
It is produced by Ernie Goss, research faculty with the Craig School of Business at Fresno State.
From 58.6 in June, the July index hit 57.5. An index of greater than 50.0 indicates an expansionary economy.
This is the 23rd straight month that the overall index has moved above growth neutral.
The employment gauge moved lower to 57.5 from 59.1 in June. The Central Valley region has experienced strong job growth at 2.6 percent over the past 12 months, significantly above the nation’s 1.6 percent expansion over the same period of time.
The prices-paid index, which tracks the cost of purchased raw materials and supplies, slipped to 68.6 from June’s 71.5, indicating elevated inflationary pressures at the wholesale level.
This month, survey participants were asked how tariffs were affecting their business operations. Approximately 25 percent of firms reported that tariffs have made purchasing from abroad more difficult. Despite this, four of 10 firms support raising tariffs to put even more pressure on trade partners.
“I expect rising tariffs, and trade restrictions to continue to boost wholesale and consumer inflation growth above the Federal Reserve’s target,” Goss said in a statement. “This trend has already begun to push consumer inflation higher. As a result, in my judgment, the Federal Reserve’s interest rate setting committee will raise short-term interest rates by one-quarter of one percentage point (25 basis points) at their September 26 meeting.”
Looking ahead six months, economic optimism, as captured by the business confidence index, fell to a healthy 65.5 from June’s 70.5.