IAR’S INLAND EMPIRE REPORT ON BUSINESS

Report for June 2014

Sponsors:
San Bernardino County Economic Development Agency
Riverside County Economic Development Agency

(Editor’s note: The Inland Empire (I.E.) is a metropolitan area and region of Southern California. It is situated directly east of the Los Angeles metropolitan area.)

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THE INLAND EMPIRE MANUFACTURING SECTOR IS BACK IN GROWTH MODE

According to Barbara Sirotnik (Director of the Institute of Applied Research), and Lori Aldana (Project Coordinator, Institute of Applied Research), “This month’s PMI (53.5) remained above the baseline 50% mark for the third month in a row. Based on the methodology underpinning the PMI, which requires three consecutive months either above or below 50% in order to determine that a change in direction has occurred in the local manufacturing sector, it appears that the Inland Empire manufacturing sector has returned to growth mode (although the drop from last month’s 57.7 indicates that the rate of growth has slowed).”

“Production increased from 62.5 last month to 63.2 this month. New Orders registered a large drop from 64.1 to 51.5, but that figure still remains above the 50% mark, reflecting growth. The Supplier Deliveries Index increased from 48.4 to 52.9 this month indicating that delivery times are getting slower (which typically happens when business is booming and suppliers have a backlog of demand). Inventories decreased from 59.4 to 52.9. The “hardest hit” index was the volatile Employment Index which decreased from 51.6 last month to 47.1 this month. This may be partially due to employers preparing for the new minimum wage rate increase that will go into effect July 1, 2014. As one Purchasing Manager commented: “New hires were the result of the new minimum pay requirement of $9/hour. We added 7 full time positions and eliminated 14 temporary employees.” Exports showed a drop from last month’s 50.0 to 42.3 and Imports decreased from 50.0 to 46.7.”

IAR’S INLAND EMPIRE REPORT ON BUSINESS

Report for May 2014

Sponsors:
San Bernardino County Economic Development Agency
Riverside County Economic Development Agency

(Editor’s note: The Inland Empire (I.E.) is a metropolitan area and region of Southern California. It is situated directly east of the Los Angeles metropolitan area.)

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PMI ABOVE 50 FOR THE SECOND MONTH

According to Barbara Sirotnik (Director of the Institute of Applied Research), and Lori Aldana (Project Coordinator, Institute of Applied Research), “This month’s PMI (57.7) remained above the baseline 50% mark for the second month in a row, with only a slight drop from last month’s PMI (59.1). The methodology underpinning the PMI requires three consecutive months either above or below 50% in order to determine that a change in direction has occurred in the local manufacturing sector. Therefore, if next month’s figure continues above 50, a statement that the manufacturing sector is back to growth mode can be made.”

“All key indicators of the PMI remained at or above the baseline 50% mark. Production decreased from 65.2 last month to 62.5 this month. New Orders registered a slight drop from 65.2 to 64.1. The Employment Index decreased from 54.5 last month to 51.6 this month, but the fact that the index remained above 50 means that more companies are hiring than downsizing. The Supplier Deliveries Index decreased from 56.1 to 48.4 this month indicating that delivery times are getting faster.”

IAR’S INLAND EMPIRE REPORT ON BUSINESS

Report for April 2014

Sponsors:
San Bernardino County Economic Development Agency
Riverside County Economic Development Agency

(Editor’s note: The Inland Empire (I.E.) is a metropolitan area and region of Southern California. It is situated directly east of the Los Angeles metropolitan area.)

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THE SKY IS NOT FALLING – PMI BACK ABOVE 50

According to Barbara Sirotnik (Director, Institute of Applied Research), and Lori Aldana (Project Coordinator, Institute of Applied Research), “This month’s PMI (59.1) was a significant increase from last month’s figure (49.0), indicating that last month’s dip below 50 was an anomaly rather than the beginning of a new trend.”

“All indices which comprise the PMI showed stability or improvement since last month. Especially positive is the fact that the Production Index jumped from 48.3 last month to 65.2 this month, and New Orders registered also a jump from 50.0 to 65.2 this month. The Employment Index (an especially critical measure) returned to 54.5 after dropping to 46.7 last month. Commodity Prices (65.2) increased over last month’s 60.0, and Supplier Deliveries also increased from 51.7 to 56.1 this month.”

Report for March 2014

Sponsors:
San Bernardino County Economic Development Agency Riverside County Economic Development Agency

(Editor’s note: The Inland Empire (I.E.) is a metropolitan area and region of Southern California. It is situated directly east of the Los Angeles metropolitan area.)

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PMI DROPS TO 49.0 AFTER 6 MONTHS OF GROWTH

According to Barbara Sirotnik (Director, Institute of Applied Research), and Lori Aldana (Project Coordinator, Institute of Applied Research), “This month’s PMI (49.0) is a decrease from last month’s 50.3. This is the first time since August, 2013, that the figure has dropped below 50. But one month’s figures do not establish a new trend. If the PMI remains below 50 for two more months, a new trend of decline in the manufacturing sector will have been established. And if the figure were to drop precipitously to 43.2 and remain at that level for three months, the overall Inland Empire economy would generally be in decline, as it was in 2008. We don’t see that happening at this point.”

“Production decreased from 51.6 last month to 48.3 this month, and New Orders increased from 48.5 to 50.0 (not a vast improvement since the index of 50 indicates that new orders are unchanged from February, a month which saw a decrease in orders). The Employment Index which had remained at 50 for three months showed a decline to 46.7. Supplier deliveries are continuing to slow (51.7). Slowing deliveries can be a hopeful sign since it often takes longer to deliver supplies when demand is high. But since production and new orders are down, slowing deliveries might just mean that suppliers of raw materials have reduced their work force and thus can’t deliver in a timely fashion. The next two months of data will be especially important for determining the meaning of this index.”

IAR’S INLAND EMPIRE REPORT ON BUSINESS

Report for February 2014

Sponsors:
San Bernardino County Economic Development Agency Riverside County Economic Development Agency

(Editor’s note:  The Inland Empire (I.E.) is a metropolitan area and region of Southern California. It is situated directly east of the Los Angeles metropolitan area.)

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PMI SHOWS GROWTH (ALBEIT ANEMIC) FOR 6TH MONTH IN A ROW

According to Barbara Sirotnik (Director, Institute of Applied Research), and Lori Aldana (Project Coordinator, Institute of Applied Research), “This month’s PMI (50.3) is a decrease from last month’s 51.9.  The good news is that this is the 6th month above the 50% benchmark showing growth in the manufacturing sector as well as the general Inland Empire economy; however the growth rate is anemic.”

“This month saw declines in the all-important Production Index (down from 56.3 to 51.6) and the New Orders Index (which declined from 51.6 to 48.5). Inflationary pressures continue to be a concern in the Inland Empire, with the Commodity Prices Index increasing from 59.4 last month to 63.6 this month mainly due to increase in the price of natural gas.  As one Purchasing Manager commented, “Natural gas has a big impact on our business.  Prices are very high.”  The Supplier Deliveries Index is virtually unchanged from last month (53.0 this month vs. 53.1 last month), as is the Employment Index which remained at 50.0 for the third month in a row.”

IAR’S INLAND EMPIRE REPORT ON BUSINESS

Report for January 2014

Sponsors:
San Bernardino County Economic Development Agency
Riverside County Economic Development Agency

(Editor’s note:  The Inland Empire (I.E.) is a metropolitan area and region of Southern California. It is situated directly east of the Los Angeles metropolitan area.)

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PMI CONTINUING TO SHOW SLOW GROWTH

According to Barbara Sirotnik (Director, Institute of Applied Research), and Lori Aldana (Project Coordinator, Institute of Applied Research), “This month’s PMI (51.9) is only a slight decrease from last month’s 53.5, and is the fifth month above the 50% benchmark which indicates a growing manufacturing sector.”

“All components of the PMI registered at or above 50 this month except the Inventory index which showed a decrease from 56.5 to 48.4.  Production was virtually unchanged (56.5 last month and 56.3 this month).  The New Orders Index decreased from 58.1 last month to 51.6 this month indicating that the rate of growth has slowed, however new orders are still coming in.  The volatile Employment Index remained at 50.0 – most companies said the overall level of employment remained the same since last month, but a small group of companies saw increases, and an equal amount saw decreases.  Commodity Prices showed a decrease from 61.3 to 59.4 but remained above 50 for the 19th month, indicating that prices continue to rise.  Supplier Deliveries increased from 46.8 to 53.1 (indicating that deliveries are slowing slightly).”