Economic growth in the central San Joaquin Valley is likely to slow over the next three to six months, weighed down by a strong dollar that makes goods produced here more expensive for overseas buyers.
That’s one of the conclusions drawn by Ernie Goss, a research economist for Fresno State, in his analysis of the monthly San Joaquin Valley Business Conditions Index. Goss and his associates base the index on results from a survey of executives from between 150 and 200 companies in Fresno, Kings, Madera and Tulare counties.
The July index released Tuesday by the Craig School of Business at California State University, Fresno, registered a score of 49.8, up slightly from the June index of 49.5. The index is calculated on a scale of 1 to 100. An index of 50.0 is considered growth neutral, and anything greater than that points to economic expansion over the coming three to six months. June and July’s sub-50 indices represent the first two months below growth neutral since December 2013.
The survey gauges executives’ opinions and insights on employment, wholesale prices, business confidence, inventory stocks, imports and exports, new orders, production and sales, and delivery lead time.
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“Things are slowing down, particularly for manufacturing and durable-goods manufacturing in the San Joaquin Valley, but the national number that came out (on Monday) was also down,” Goss said Tuesday. “We had a good run of it.”
We’re not hearing much in the surveys about the drought and its lingering impacts.
Economist Ernie Goss, research faculty member at Fresno State’s Craig School of Business
Goss said what stood out “not as disturbing but surprising” as he prepared his analysis “was the importance of international turmoil, international conditions, international sales and how that’s impacting businesses.” He added that agriculture’s economic dominance of the region, “and its tentacles backward and forward, show how much the value of the dollar influences economic activity, and that stands in stark contrast to a lot of the rest of California because of that agricultural base.”
Also notable this month is what executives didn’t mention much as a factor influencing their business: the drought. “We’re not hearing much in the surveys about the drought and its lingering impacts,” Goss said.
The employment component of the Valley index rose to the growth-neutral threshold of 50.0 after three consecutive months in subneutral territory. Until recent months, Goss said local businesses had been hiring at a strong pace, but that had slowed somewhat. “The Valley has had a real strong year, more than a year, of very good job growth,” he said.
Over the past year, Goss explained, job growth in the Valley has been at a rate of about 3 percent, more than double the national pace. “Unemployment is still too high, but the growth was good.” He added that the gap between job growth in the Valley and the U.S. is narrowing.
July’s official unemployment figures from the state Employment Development Department aren’t available yet, but Goss’ analysis reflects what the Valley experienced in its unemployment rates in June. Across the region, unemployment rates ticked upward from May, largely as a result of more people entering the workforce looking for jobs. But those rates improved from June 2015 levels.