The San Joaquin Valley Business Conditions Index, which is used as a leading economic indicator, slipped below the growth-neutral threshold in June for the first time since December 2013.
The index fell from 51.2 in May to 49.5 in June, which puts economic growth under the neutral score of 50.
The index forecasts economic conditions in the three to six months to come, but the drop does not necessarily mean the overall economy shrank in June, said economist Ernie Goss, who prepares the index.
“One month does not an economy make,” Goss said. “This would indicate that manufacturing dipped a bit for a month, construction dipped, but the overall economy probably still grew.”
He said numbers detailing the overall economic growth of the area would come out later in July, but that the drop was not definitively concerning.
“I’d have to see several months of declining numbers to say the economy is shrinking,” he said. “The numbers have been strong for a very long time.”
Goss builds the index monthly for Fresno State’s Craig School of Business from surveys given to business leaders in Fresno, Tulare, Madera and Kings counties.
The index uses a scale of zero to 100 to denote economic growth – a number greater than 50 indicates growth over the next three to six months.
Despite the slight drop, the survey found about half of the businesses that participated expect to maintain their staff numbers, 25 percent forecast hiring and 20 percent anticipate layoffs.
One of the biggest signs of the drop came from businesses reducing raw supplies inventories in June, which caused the June inventory index to significantly drop from 49.1 to 41.9.
Goss said a lot of what happens in the months to come will depend on the global economy.