Over the past year, the local economy has been struggling with numerous issues. But still, there was some positive news at the end of 2021, a new report said.
The Purchasing Managers’ Index (PMI), which is an important indicator of the strength of the economy, has remained above the baseline 50 percent mark for 16 consecutive months, according to the Inland Empire Report on Business.
The December PMI registered 55.5 percent, which showed that the I.E.’s manufacturing sector and overall economy have continued the trend of steady growth for more than a year, said Dr. Barbara Sirotnik and Lori Aldana, who compiled the survey of area businesses.
“Yes, 2021 saw skyrocketing inflation, difficulties finding skilled labor, emergence of the Delta and Omicron variants, and supply chain disruptions. If these issues begin to ease in 2022, the Inland Empire economy will continue its recovery,” said Sirotnik and Aldana, who are analysts from the Institute of Applied Research at Cal State San Bernardino.
One area of concern was the Employment Index, which dropped from 48.3 in November to 43.1 in December.
“This is the second month the index has registered below 50, indicating that employment has declined,” the authors said. “As we noted in last month’s report, part of this decline may be due to seasonal factors, but part may be reflecting a nationwide issue of workers choosing to leave the job market due to early retirements, fears of COVID, or the need to care for ill family members. Another factor may be what has been dubbed the ‘Great Resignation’ (employees’ willingness to quit lower paying jobs and accept jobs at companies willing to pay large hiring bonuses). Overall, labor shortages are causing havoc throughout the supply chain.”
The Commodity Price Index took another significant jump from the previous month’s 79.3 up to 87.9, indicating that the Inland Empire is still dealing with inflationary pressures, the report said.
“That is bad both for manufacturing firms needing to buy raw materials, and consumers who are not able to purchase as much because of high prices on everything from cars to computers to gasoline and food,” Sirotnik and Aldana said.
“The pressure of supply disruptions, price increases, and labor strains are still being felt by Inland Empire panelists, although optimism about the future state of the economy has crept up a bit since last month. Only 20 percent forecasted a strengthening local economy for the next three months, however we note that this is a significant increase from last month’s 4 percent.”