Inland Empire purchasing managers are optimistic about the economy, according to a new report.
The monthly survey, conducted by the Institute of Applied Research at Cal State San Bernardino, showed some positive signs, according to authors Dr. Barbara Sirotnik and Lori Aldana.
“The December Inland Empire Purchasing Managers’ Index (PMI) registered 53.6, slightly up from November’s 52.1. This is the third month in a row that the index has remained above the baseline 50 percent mark, the level which indicates growth in the Inland Empire’s manufacturing sector and economy as a whole," the authors said.
“The Production Index increased only slightly from last month’s 56.9 to 57.1 this month, and the New Orders Index jumped from 53.4 to 60.7. The Inventory Index increased from 46.6 to 51.8 this month (probably in anticipation of increased production) and the Supplier Deliveries Index was virtually unchanged from 53.4 last month to 53.6 this month. Supplier delivery figures above 50 indicate that deliveries have slowed (usually due to suppliers being busy). The Employment Index registered a big drop from 50.0 to 44.6 this month. That index has been below 50 (showing declining employment) for five of the 12 months of 2019.”
Sirotnik and Aldana said that only 7 percent of surveyed purchasing managers (down from 12 percent last month) believe that the local economy will become weaker over the next three-month period.
In contrast, 30 percent of respondents believe that the economy will become stronger, and almost two-thirds (63 percent) believe that it will stay the same over the next three months, the authors said.
"In summary, nearly all components of the local PMI are positive, showing growth in new orders and production," they said.
"We have consistently noted that the Inland Empire economy is not in lockstep with the national economy. This month is a case in point. The Institute of Supply Management’s PMI (which uses the same survey instrument and methodology as IAR’s Inland Empire PMI report) has remained below 50 for the past five months, and this month it registered its lowest level since June 2009. The Federal Reserve has noted that import tariffs and concerns about a US-China trade war are hurting U.S. manufacturing. The recent escalating tensions in the Middle East could affect oil prices which, in turn, could cause problems for the global economy.
"Yet amidst this negative economic news, the Inland Empire economy appears to be remaining strong. Yes, the economy clearly has had its ups-and-downs throughout 2019, and we have seen three months of PMI figures registering at or below 50. But for now, the PMI (a short-term leading indicator) reflects a positive picture for the Inland Empire manufacturing sector and overall economy. Let’s hope it stays that way as we usher in a new year and a new decade."