The Inland Empire Report on Business for June 2023, prepared by The Institute of Applied Research (IAR) at CSUSB’s Jack H. Brown College of Business and Public Administration, reveals positive developments in the region’s manufacturing sector.

Sponsored by the San Bernardino County Economic Development Agency and Riverside County Office of Economic Development, the report indicates a potential recovery despite lingering concerns. This article examines the key findings and implications of the report.

PMI at 52.1, Second Consecutive Month Above 50

Dr. Barbara Sirotnik, the Institute of Applied Research Director, and Lori Aldana, Project Specialist, announce that the Inland Empire Purchasing Managers’ Index (PMI) recorded 52.1, showing an increase from the previous month’s 50.0. While three consecutive months are needed to establish a trend, this signifies a potential return to growth mode for the region’s manufacturing sector.

Production Index Reaches 64.0

The Production Index, one of the key components of the PMI, experienced a significant rise from last month’s 47.9 to 64.0. Notably, this value surpasses the figures recorded in June 2021 (60.0) and June 2022 (53.8), indicating a positive upward trend in production.

New Orders Index Indicates Stability

The New Orders Index, another crucial component of the PMI, registered 50.0, marking the fourth time in the past 12 months that the index reached or exceeded this level. This stability suggests a consistent flow of new orders for regional manufacturers.

Employment Index Remains Steady

The Employment Index slightly decreased from 54.2 to 50.0, indicating a similar level of employment compared to the previous month’s hiring surge. While the index did not show significant growth, it did not decline, providing stability in the job market.

Commodity Price Index Reflects Inflationary Pressure: The Commodity Price Index increased from 52.1 to 56.0, signaling a slight rise in inflationary pressures. However, it remains significantly lower than the 2022 high of 98.3, which coincided with a 40-year high of 9.1% inflation in the United States.

Supplier Deliveries Improve

The Supplier Deliveries Index, which measures the speed of supplier deliveries, decreased from 52.1 to 46.0. This indicates that deliveries are becoming faster, possibly contributing to smoother supply chain operations.

Inventory Levels Remain Stable

The overall inventory level, including raw materials, maintenance and repair items, and intermediates, remained unchanged at 52.1 compared to the previous month. Most panelists (76.0%) reported that their inventory levels of finished goods stayed the same as the last month, suggesting a balance between production and sales. Only a small percentage reported inventory increases (12.0%) or decreases (12.0%).

Optimism Grows, but Challenges Persist: While optimism about the future state of the economy has improved compared to previous months, it remains cautious. Only 12.0% of respondents believe the economy will improve in the next quarter, 64.0% anticipate no significant change, and 24.0% expect a weaker economy. These figures highlight the ongoing challenges and uncertainties faced by the region.

Conclusion

The Inland Empire’s manufacturing sector has shown signs of recovery in June 2023, with the PMI rising above 50 for the second consecutive month. Improved production, stable new orders, and steady employment indicate positive momentum. However, challenges such as potential rate hikes and a looming UPS worker strike raise concerns about a nationwide recession. The region’s economy faces uncertainties, requiring cautious optimism and proactive measures to ensure sustained growth and stability.