Written by Gabriel Dillard
San Joaquin Valley business prospects have continued to slip for the third straight month, though they continue to remain in positive territory.
That’s the word from the September San Joaquin Valley Business Conditions Index, derived from a survey of individuals making company-purchasing decisions for firms in the counties of Fresno Kings, Madera and Tulare.
The overall index for September was 52.9, down from 55.1 for August, and also down from an all-time high of around 63.0 for summer 2017. An index greater than 50 indicates an expansionary economy over the course of the next three to six months.
The monthly index is produced by Ernie Goss, research faculty with the Craig School of Business at Fresno State.
“This is the 25th straight month that the overall index has moved above growth neutral,” Goss said. “Both durable and non-durable goods manufacturing reported solid gains for the month. As in recent months, construction activity in the San Joaquin Valley continued to expand at a very healthy pace.”
The employment gauge moved lower in September to 52.5, from 55.0 the month prior. Goss expects job growth to slow a bit from the 1.8 percent of the past 12 months. Businesses continued to report difficulty hiring qualified workers.
The wholesale prices index climbed to 68.5 from 67.6 in August –an indication of modest inflationary pressure. Trade spats have already caused rising wholesale prices, including steel prices by 19 percent this calendar year, Goss said.
“I expect rising tariffs, and trade restrictions to continue to boost wholesale and consumer inflation growth above the Federal Reserve’s target,” he added. “This trend has already begun to push consumer inflation higher.”
As a result, Goss expect the Federal Reserve’s interest rate setting committee to raise short-term interest rates by another one-quarter of one percentage point (25 basis points) at their Dec. 19 meeting.
Business confidence hit a mark of 62.8 from 62.5 in August, with morale still buoyed by healthy profit growth, still-attractive interest rates and lower taxes.
Other components of the September Business Conditions Index were: inventories at 50.6 from 45.3 in August; new export orders at 43.1 from August’s 49.9; new orders at 52.0, down from 59.5 in August; production or sales at 53.2, down from 61.3 in August; and delivery lead time at 56.2, up from last month’s 54.5.