Written by The Business Journal Staff
For the twenty-ninth consecutive month, the San Joaquin Valley Business confidence Index rose above the 50.0 growth neutral threshold in April. But the latest index reading registered a dramatic drop from the previous month.
The index, a leading economic indicator from a survey of individuals making company purchasing decisions for firms in Fresno, Kings, Madera and Tulare counties, rose and continues to point to positive growth for the next 3 to 6 months. The index is produced using the same methodology as that of the national Institute for Supply Management.
But the April business index plummeted to 50.4 from 57.2 in March. This is the lowest recorded reading since November 2012, according to Dr. Ernie Goss, a research faculty member at Fresno State’s Craig School of Business and the author of the index.
Goss said business confidence index readings over the past months are in a range pointing to softer growth over the next 3 to 6 months for the region. An index greater than 50.0 indicates an expansionary economy over the course of the next three to six months.
“According to our survey results over the last several months, economic growth will remain positive but somewhat weaker in the months ahead,” Goss said. “As in February, growth slowed for durable goods manufacturers. On the other hand, food processors, wholesale trade and business services firms continue to experience healthy growth.”
The Valley’s employment outlook dimmed considerably last month. For the first time since October 2013, the regional hiring gauge fell below the growth neutral 50.0 threshold in April. The employment index slumped to 49.4 from 57.8 in March.
“Job growth in the San Joaquin Valley has waned over the past months with April’s survey indicating slight job losses,” Goss aid. “Gains for construction and manufacturing were more than offset by losses for firms with tight links to agriculture and international markets.”
The prices-paid index, which tracks the cost of purchased raw materials and supplies, advanced to 51.7 from March’s 48.9.
“Just as in other regional surveys and the national survey, Fresno State’s survey over the past many months shows little evidence of inflationary pressures at the wholesale level,” Goss said.
Looking ahead six months, economic optimism, as captured by the business confidence index, expanded to a still relatively frail 48.9 from March’s 47.9. Weak agriculture commodity prices, and global economic weakness continue to weigh on expectations of future economic conditions, Goss said.