Written by The Business Journal Staff
The index is a leading economic indicator compiled from a survey of individuals making company purchasing decisions in the counties of Fresno, Madera, Kings and Tulare. It uses the same methodology as that of the national Institute for Supply Management.
While index conditions over the summer pointed to slowed economic growth, September’s index is encouraging, indicating an expansionary economy over the course of the next three to six months.
“This is the strongest reading we’ve had since March of this year so things are looking up,” said Dr. Ernie Goss, research faculty with the Craig School and the author of the index. “I’m very encouraged by this latest reading.”
For the third consecutive month, the hiring gauge was at or above the growth neutral 50.0 threshold, climbing to 56.8 from August’s 51.8. Over the past 12 months, the region experienced job growth above three percent, which is almost triple the pace of the nation.
“The job index for September is 56.8; That’s a good reading, not like your chemistry high school exam,” Goss said. “The growth for this month was in manufacturing, in particular in food processing, and wholesale trade. We see more weakness in construction and information technology.”
The prices-paid index, which tracks the cost of purchased raw materials and supplies, rose to 55.4 from 53.7 in August. Mirroring other regional and national surveys, the San Joaquin Valley inflationary gauge shows modest but advancing inflationary pressures at the wholesale level.
This month survey participants reported how a Federal Reserve rate hike, if implemented in 2016, would affect their firm.
“If a federal reserve hike does come in November or later on in December, 27.8 percent of business leaders, over one in four, expect it to hurt their business,” Goss said. “On the other hand, 11. 1 percent think it will help their business. Of course the remaining 61.1 percent think it won’t have much of an impact.”
Looking ahead six months, economic optimism, as captured by the business confidence index, slumped to 44.5 from August’s 44.8. Goss said weak U.S. and global growth are negatively affecting confidence among businesses in the San Joaquin Valley.