The San Joaquin Valley Business Conditions Index has determine the economic climate to be growing for the 24th consecutive month. Screen Capture from California State University Fresno website.
Written by The Business Journal Staff
Tariffs contributed to another dip in the Valley’s economic performance for August, though conditions still reflect an expanding economy for the next three to six months.
The San Joaquin Valley Business Conditions Index, put out by the Craig School of Business at Fresno State University, puts the measure at 55.1, a decline from July’s 57.5 and the second straight decline since it rose in June. A number above 50 indicates a growing economy.
“Both durable and non-durable goods manufacturing reported solid gains for the month,” said Ernie Goss, research faculty with the Craig School of Business at Fresno State. “As in recent months, construction activity in the San Joaquin Valley continued to expand at a very healthy pace. I expect this pace to remain strong for the next three to six months.”
This comes amidst tariffs that affected businesses ability to both import and export. A survey conducted by the institute revealed that approximately one-fourth of firms reported negative impacts on sales and purchases abroad. Export orders fell to 49.9 from 55.4 in July.
Import orders fell to 44.9 from 49.8.
Additionally, the inventory index fell to 45.3 from 47.2, remaining below growth neutral. Inventories reflect the growth or decline in raw materials and supplies.
Prices are rising as the prices-paid index dropped to 67.6 from 68.6 in July, indicating businesses are paying more for raw supplies, pushing consumer and wholesale inflation above Federal Reserve targets, said Goss.
Countering the bad news from tariffs comes good news in the areas of employment and business confidence.
Though the employment gauge fell to 55 from 57.5 in July, outlook is still positive in that businesses are still adding jobs.
“The San Joaquin region has experienced strong job growth at 2.7 percent over the past year, or significantly above the nation’s 1.6 percent expansion over the same period of time. I expect the region to continue to add jobs, but at a somewhat slower pace for the next three to six months,” Goss said.
Businesses still report strong optimism for the future, measuring in at a “healthy” 62.5, despite a fall from 65.5.
“Healthy profit growth and still low interest rates boosted business confidence. However, I expect rising tariffs and trade restriction to shrink business confidence in the months ahead,” Goss said.
New orders fell to 59.5 from 63.7, production or sales fell to 61.3 from 65.1 and delivery lead time rose slightly to 54.5 from 54.1.