For the ninth consecutive month, the San Joaquin Valley Business Conditions Index rose above the 50.0 threshold, pointing to economic growth for the next three to six months. The overall August index rose to 57.6 from 57.3 in July. This marks the highest point the index has hit since March 2013.

“Despite the healthy reading, more than one-third of the businesses in the region reported negative impacts from the drought,” said Dr. Ernie Goss, research faculty with Fresno State’s Craig School of Business. “More than 70 percent expect a continuation of the drought to negatively impact their business. Even with drought conditions, business activity was healthy for the month, especially for non-durable goods manufacturers including food processors.”

The index, produced by the Craig School, is a leading economic indicator from a survey of individuals making company purchasing decisions in the counties of Fresno, Madera, Kings and Tulare.

The index uses the same methodology as that of the national Institute for Supply Management.

Other survey findings:

Employment: After moving below growth neutral for January, the hiring gauge has held above the 50.0 threshold for the past seven months. The job index slid to a solid 57.0 from 58.1 in July. According to Goss, the region is adding jobs at a healthy pace. “Since the national economic recovery began in July 2009, the region has added almost 24,000 jobs for a gain of 8.2 percent.”

Wholesale prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, increased to indicate elevated inflationary pressures at the wholesale level. The wholesale inflation gauge slumped to 66.0 from 70.2 in July.

Business confidence: Looking ahead six months, economic optimism, captured by the business confidence index, declined to 58.6 from 61.3 in July.

Inventories: Businesses reduced inventories of raw materials and supplies for the month.  The August inventory reading sank to 47.2 from July’s 47.5.

Trade: The new export orders index advanced slightly to a very weak 43.6 from July’s 43.5. Goss said the weak new export orders index over the past several months will place some downward pressures on regional growth. The regional import reading for August advanced to 52.4 from July’s 49.3 as expanding sales encouraged businesses to add to their buying from abroad.

Other components: Other components of the August Business Conditions Index were new orders at 61.0, down from 62.5 in July; production or sales at 66.6, up from July’s 62.6; and delivery lead time at 56.2, up slightly from 56.1.

For more information, contact Goss at 559.278.2352.

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