A new survey of area businesses reveals that the Inland Empire is continuing to show growth for the manufacturing sector and the economy as a whole, but the region is still being plagued by ongoing price increases, supply chain disruptions, and labor shortages.
In addition, the uncertainty about the effects of the war in Ukraine is a concern, as is the possibility of a new COVID-19 surge, according to the Inland Empire Report on Business that was released on June 1.
The monthly report is prepared by the Institute of Applied Research at Cal State San Bernardino.
“This month’s Inland Empire Purchasing Managers’ Index (PMI) is 54.4, virtually unchanged from last month’s 54.2. The index has remained above the baseline 50 percent mark for 21 consecutive months, indicating that the Inland Empire manufacturing sector and the overall economy are approaching two years in growth mode,” said the report’s authors, Dr. Barbara Sirotnik and Lori Aldana.
The survey’s Employment Index stayed positive (above 50) for another month, although the pace of growth was slower than the previous month, decreasing from 61.5 to 56.0. For the third month in a row, most panelists who saw increased employment said they hired people in permanent positions (as opposed to temporary).
However, inflation kept burdening local businesses (as well as consumers), as gasoline prices soared above $6 per gallon.
“For the 35th month, the Commodity Price Index has reflected inflationary pressures. This is not a surprise given that getting control of inflation nationwide is one of the Fed’s (and President Biden’s) top priorities,” the authors said. “The index decreased slightly from last month’s 90.4 to 86.0 this month. Although the figure is quite high, we must note that it is not as high as it was between March and June 2021, and it has declined since January.”
Because of the frustration over inflation, it is not surprising that 63 percent of survey respondents predicted that the economy would be weaker in the coming quarter (up sharply from last month’s 42 percent). Only 4 percent of panelists forecasted a strengthening local economy for the next three months, unchanged from last month. That leaves only 33 percent (down from 54 percent last month) predicting that the economy would remain unchanged over the next few months, Sirotnik and Aldana said.
Gasoline prices have soared above $6 per gallon in the Inland Empire.