Positive remarks from Purchasing Managers included: “Unusually busy summer. June schedule is about 150% of normal month and maybe double a typical June,” “Modest local economic improvements,” “Sales brisk, maintaining large backlog,” “Orders are up, domestic and international. Customers are encouraged,” “June sales ended up considerably higher than anticipated,” “We have won several large international contracts,” and “There seems to be a trend upward.”
There were also several negative/cautionary responses, including: “It feels that the current business condition is very tenuous…we are watching expenses very closely and this is reflected by others in our industry based on a recent meeting I attended with industry members from all market sectors in our industry and all areas of the country. We are still optimistic based on the value we feel we can bring to our customers and potential customers, but we are analyzing the pluses and minuses much more than we used to prior to pursuing new efforts,” “Business continues to be slower than previous months,” and “Looks the same as last month…very deceiving recovery.”
In summary, recent data from California’s Employment Development Department shows that the unemployment rate for Riverside and San Bernardino Counties is dropping to 2008 levels. Job growth has been seen in construction, health care, logistics, and professional and business services sectors. Consumer spending is up nationwide (which is good news for manufacturing firms such as the ones we survey to prepare this report). And this month’s survey of Riverside and San Bernardino County Purchasing Managers shows that Production and New Orders (perhaps the two most important indices in this report) are both up, as is the overall PMI.
Seemingly, the picture is quite rosy. There are, however, two cautionary notes. First, instability in Iraq could cause an increase in oil (and therefore gas) prices. This cost increase would presumably be passed on to consumers, which could cause further economic
instability in the Inland Empire. The second is the July 1 minimum wage increase. As we said in last month’s report, the increase is relatively small at this point, but companies are aware that overtime rates, vacation payments, and missed meal and rest period premium payments will all go up when the minimum wage increases. Of course, the price of goods could go up accordingly. And companies might replace low-wage temporary workers with fewer full-time staff.
For now, we are cautiously optimistic about the Inland Empire manufacturing sector and the overall economy.
FOR QUESTIONS OR FURTHER INFORMATION, CONTACT:
Dr. Barbara Sirotnik
Director, Institute of Applied Research
(909) 537-5729
Kelly Reenders
Administrator, San Bernardino County Economic Development Agency
(909) 387-9801
Rob Moran
Economic Development Manager, Riverside County Economic Development Agency
(951) 955-6673
Dr. Lawrence Rose
Dean, College of Business and Public Administration, CSUSB
(909) 537-3703
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Institute of Applied Research
Report on Business
Released 7/01/2014