INLAND EMPIREBUSINESS ACTIVITY INDEX

Quarter 2 | 2019

The Inland Empire Business Activity 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.

INLAND EMPIREBUSINESS ACTIVITY INDEXBusiness activity in the Inland Empire picked up during the second quarter of 2019, increasing at a 2.5% annualized rate. This

marks an acceleration over the sluggish 0.8% gain the region saw in the first quarter. Growth in the Inland Empire’s business

activity also surpassed growth nationally. U.S. Gross Domestic Product (GDP) advanced by 2.1% in the second quarter of this

year according to initial estimates from the U.S. Bureau of Economic Analysis. However, in year-over-year terms, from the

second quarter of 2018 through the second quarter of 2019, business activity in the region grew by 1.8%, outpaced by U.S.

GDP, which grew by 2.3%.

900 University Avenue Riverside, California 92521 | Tel: 951-827-2792 cefd@ucr.edu | ucreconomicforecast.org

BUSINESS ACTIVITY INDEXINLAND EMPIRE

95

100

105

110

115

125

120

05-Q

1

05-Q

3

06-Q

1

06-Q

3

07-Q

1

07-Q

3

08-Q

1

08-Q

3

09-Q

1

09-Q

3

10-Q

1

10-Q

3

11-Q

1

11-Q

3

12-Q

1

12-Q

3

13-Q

1

13-Q

3

14-Q

1

14-Q

3

15-Q

1

15-Q

3

16-Q

1

16-Q

3

17-Q

1

17-Q

3

18-Q

1

18-Q

3

19-Q

1

2009

= 1

00

IN FOCUS: WHAT ARE THE INLAND EMPIRE’S COMPETITIVE INDUSTRIES?

This quarter’s In Focus examines the factors that contribute

to the Inland Empire’s employment growth. To do this,

the Center for Economic Forecasting uses the shift-share

technique, which is based on the assumption that local

economic growth can be explained by the combined effect

of three components: national share, national industry mix,

and regional shift (all defined below). This method allows for

a better understanding of how an industry’s performance can

be attributed to unique regional factors in a given area—in this

case, the Inland Empire. This analysis uses recently released

data from the U.S. Bureau of Labor Statistics’ Quarterly

Census of Employment and Wages, 2013 to 2018.

The table below shows how the inland Empire’s industries

have performed over the course of the last five years, ending

in 2018. The National Share column measures how much total

employment in a given industry in the Inland Empire increased

due to growth in the national economy. For example, had the

Inland Empire’s Transportation and Warehousing industry

grown at the same rate as the national economy overall, regional

employment in that industry would be roughly 76,420 jobs. The

Industry Mix column identifies fast or slow growing industries in

the Inland Empire based on the national growth rates for those

industries minus the National Share. In other words, Industry

Mix illustrates how much growth in a given regional industry is

explained by growth in that industry at the national level. Finally,

the Regional Shift (or competitive effect) column measures local

industry employment that is attributable to local characteristics

and trends. The Regional Shift is the most important and telling

metric in this analysis because it identifies the Inland Empire’s

leading and lagging industries as compared to the nation—a key

measure of performance.

900 University Avenue Riverside, California 92521 | Tel: 951-827-2792 cefd@ucr.edu | ucreconomicforecast.org

SHIFT SHARE ANALYSISINLAND EMPIRE 2013-2018

Source: Bureau of Labor Statistics; Quarterly Census of Employment and Wages

Industry2018 IE

Employment 5 - Yr. Change National Share Industry Mix Regional Shift

Lagging/LeadingIndustry

Transportation and Warehousing 123,893 54,586 76,418 8,533 38,942 Leading

Health Care 208,988 46,961 178,653 3,321 27,014 Leading

Construction 104,781 35,466 76,427 9,612 18,742 Leading

Accommodation 150,467 31,841 130,799 4,093 15,575 Leading

Manufacturing 100,690 14,217 95,346 -4,170 9,514 Leading

Retail Trade 180,630 16,173 181,332 -9,072 8,370 Leading

Wholesale Trade 64,534 8,650 61,619 -4,624 7,539 Leading

Administrative Support 100,227 14,427 94,604 1,265 4,358 Leading

Real Estate 18,895 3,408 17,076 290 1,529 Leading

Other Services 41,455 3,522 41,825 -968 597 Leading

Education 16,285 1,926 15,832 -39 491 Leading

Arts & Entertainment 19,658 3,029 18,336 1,012 311 Leading

Mining 1,126 -61 1,309 -326 143 Leading

Agriculture 14,521 123 15,875 -845 -510 Lagging

Utilities 4,936 -643 6,151 -532 -683 Lagging

Information 11,053 -232 12,444 -693 -697 Lagging

Professional & Technical Services 41,632 3,890 41,615 1,520 -1,503 Lagging

Management 8,091 -643 9,630 200 -1,739 Lagging

Finance & Insurance 24,607 -1,725 29,033 -1,180 -3,247 Lagging

At the other extreme, Finance and Insurance was the Inland Empire’s weakest industry in terms of the Regional Shift

(competitive effect). Had this industry followed the national employment trend, there would have been nearly 4,500 more

Finance and Insurance jobs in the Inland Empire in 2018.

900 University Avenue Riverside, California 92521 | Tel: 951-827-2792 cefd@ucr.edu | ucreconomicforecast.org

This methodological technique reveals how overall national job

trends, industry-specific job trends, and regional employment

patterns contribute to total industry employment at the

regional level. For example, total employment in Transportation

and Warehousing in the Inland Empire was 123,893 in 2018,

of which 7,112 positions (or 13%) were attributed to the

nation’s employment trends, 8,533 positions (or 15.6 %)

were attributed to employment trends within the industry at

the national level, and 38,942 positions (or 71.3%) were due

to local patterns and trends in employment. The large share

of employment attributed to local trends (Regional Shift)

demonstrates the competitive advantage the Inland Empire

has over other areas in the Transportation and Warehousing

industry. The industry has performed fairly well at the national

level, due in part to a rise in e-commerce, but an abundance

of lower-cost and developable land, which the Inland Empire

has and which is critical to this industry, has helped its local

employment base expand more robustly.

Extending this analysis to the subsectors within the

Transportation and Warehousing industry (see table

below) reveals a more granular breakdown, and illustrates

the lagging and leading areas within the industry. Perhaps

unsurprisingly, Warehousing and Storage is out in front,

followed by Truck Transportation.

Industry2018 IE

Employment 5 - Yr. Change National Share Industry Mix Regional Shift

Lagging/LeadingIndustry

Warehousing & Storage 68,673 41,455 30,011 13,888 24,775 Leading

Couriers & Messengers 14,282 7,005 8,025 1,768 4,490 Leading

Support Activities for Transportation 9,584 3,133 7,112 615 1,856 Leading

Truck Transportation 26,843 3,773 25,437 -300 1,706 Leading

Transit & Ground Passenger Transportation

3,429 76 3,697 -83 -185 Lagging

Air Transportation 643 -924 1,728 28 -1,114 Lagging

SHIFT SHARE ANALYSISINLAND EMPIRE LOGISTICS SUBSECTORS, 2013-2018

Source: Bureau of Labor Statistics; Quarterly Census of Employment and Wages