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August 8, 2019

Inland Empire business activity jumps following first quarter slowdown

New analysis reveals region’s most and least competitive industries

Author: Victoria Pike Bond
August 8, 2019

Business activity in the Inland Empire picked up again in the second quarter of 2019 after slowing conspicuously earlier in the year. The new Inland Empire Business Activity Index released today by the UCR School of Business Center for Economic Forecasting and Development, shows a jump of 2.5% in the region’s business activity in the second quarter, a noticeable increase over the scant 0.8% gain in the first quarter. Looking over the past year, however, the region has been outpaced by the nation as a whole, with U.S. GDP growing by 2.3% from the second quarter of 2018 to the second quarter of 2019 compared to the Inland Empire’s 1.8% expansion in business activity.

“While quarter-to-quarter variations like this are to be expected, the most recent growth in business activity is a reassuring sign of continued expansion in the Inland Empire economy,” said Robert Kleinhenz, Executive Director of Research at the Center for Economic Forecasting and one of the Index authors. “The slower pace of growth compared to the nation as a whole is the result of labor market constraints across Southern California, with employers in the Inland Empire competing with the broader region for the workers in Riverside and San Bernardino Counties.”

The latest Index report also uses a ‘shift share’ analysis to illustrate which industries in the Inland Empire are the most competitive and which ones lag the most when compared to the nation. While the health care industry contributes the greatest number of jobs to the region, transportation and warehousing is the most competitive local industry nationally as a large share of its performance can be attributed specifically to regional characteristics and conditions – lending inherent competitiveness. The industry contributes the fourth largest number of jobs, behind health care, retail, trade, and accommodation. Along with construction and manufacturing, these six industries make up the most competitive or leading sectors in the Inland Empire.

According to the Index authors, the least competitive industry in the region is finance and insurance. In this industry, the growth that can be attributed specifically to local factors falls into negative territory. Other lagging industries include management, professional and technical services, information, and utilities.

“The analysis demonstrates the level of competitive advantage that certain industries currently find in the Inland Empire,” says Kleinhenz. “For example, the strength of the transportation and warehousing industry is being partly driven by the rise in e-commerce, but it’s the need for developable land, which the Inland Empire has a lot of, that makes the region so desirable to the industry and fuels the local advantage.”  

The current Inland Empire Business Activity Index is now available. The Index tracks performance of the Inland Empire regional economy on a quarterly basis and is adjusted for seasonal variations. The composite indicator is estimated using a wide range of economic data including employment, economic output, income, real estate, and other indicators at the national, state, and metropolitan level. The Index is produced entirely by the UC Riverside School of Business Center for Economic Forecasting and Development

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