manufacturing
November 14, 2019

Inland Empire business activity outpacing U.S. GDP growth

Local manufacturing industry remains a key growth sector

Author: Victoria Pike Bond
November 14, 2019

For the second quarter in a row business activity in the Inland Empire has outperformed the nation as a whole. 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 2.3% in the region’s business activity in the third quarter compared to 1.9% growth for U.S. GDP. On an annual basis, from the third quarter of 2018 to the third quarter of 2019, the region’s business activity growth has been roughly on par with the national growth rate at 1.8% and 2.0%, respectively.

“The near term outlook is also positive with growth continuing into 2020, driven by key local industries such as logistics,” said Christopher Thornberg, Director of the Center for Economic Forecasting and one of the Index authors. “The challenge lies in the longer term, where economic and industry growth will be held back by labor shortages caused by California’s lack of home supply and the unaffordability that creates.”

The latest Index reports that business activity in the Inland Empire is forecast to rise between 1.9% and 2.4% over the next year. 

The report also takes a deeper look at the region’s manufacturing industry which remains a leading local job sector despite a well-known and decades-long decline in manufacturing employment across California and the nation. The analysis measures the industry’s employment growth since the depths of the ‘Great Recession’ in 2009 and finds that in California as a whole, manufacturing jobs have only grown by 5.7% while they have increased by 18.3% in the Inland Empire. Still, despite the expansion, the IE’s manufacturing sector has not fully recovered from the recession when it shed 28.6% of its total employment

Manufacturing employment

“Manufacturing tends to be a highly cyclical industry and it was hit hard during the recession,” said Thornberg. “But it’s clearly an important growth sector in the Inland Empire – if you look longer term, since 1976, manufacturing employment in the region has nearly doubled while areas such as Los Angeles County have experienced sustained declines, indicating a more inherent competitive advantage locally.” 

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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