Almost a quarter of Orange County businesses expect to be at pre-pandemic levels of operations by the end of the year, while local firms’ hiring and profit outlook have also improved, according to economists at California State University-Fullerton.
“It is very heartening to see that Orange County business feels a lot more stable,” CSUF lead economist Anil Puri told the Business Journal last week.
Puri heads CSUF’s Woods Center for Economic Analysis and Forecasting; the center just completed its quarterly Orange County Business Expectations Survey, or OCBX, looking ahead to the next three months.
The OCBX improved appreciably to 62.9 for the upcoming third quarter from 22.7 in the current three-month period.
A reading of above 50 indicates belief in future economic growth, and the index itself is a measure of the overall view of the economy.
The economists’ survey of some 500 business leaders’ expectations for the three-month period starting on Wednesday, July 1 is one of the strongest indications so far OC may have turned the corner on the COVID-19 recession and is heading back to growth. The response rate was about 14%.
It comes as OC businesses are starting to reopen after the pandemic forced firms and schools to temporarily shut down and led to a boom in working and learning from home.
The county’s unemployment rate in May reached 14.5%, up from 3.6% in March.
‘Significant Improvement’
Last quarter’s 22.7 figure marked the most significant decline in the index since the Great Recession.
The latest reading is also a record breaker. “This is the most significant improvement in the index since the Great Recession of 2008-09,” Puri said.
The difference in this recession “is that a similar improvement took almost two years to achieve during the Great Recession compared to a single quarter now.”
The survey was conducted from June 19-23. Puri noted that the coronavirus infection rates had been getting worse in some areas since that time (see story, page 1).
“Things could change going ahead,” Puri said. “The virus is also going to decide the path of the economic recovery.”
Politics, Social Issues
The survey also found that almost 72% of executives “think that the political and social conditions currently gripping the country pose a major threat to the economy and business.”
While 24.3% of the businesses surveyed expect to get back to a pre-pandemic level by the end of December, a fifth think it will be after 2021, the survey said. Most others expect to get there by the middle of 2021.
Workforce Increases
Almost 23% of firms surveyed intend to increase their labor force, a huge jump over 3.8% in the last quarter, the survey said, while 58.6% intend to make no change. The number of companies planning to cut jobs fell from 50% in the last quarter to 18.6% in the outlook for the third quarter.
OC’s hiring picture “has brightened appreciably for the coming quarter,” the CSUF economists said.
In other key findings looking ahead to the third quarter starting July 1:
• 47.1% of the executives expect significant or some growth in their industry, compared to 20% in the last quarter.
• 45.7% of the firms surveyed expect their sales to increase in the third quarter, compared to 14.8% in the previous quarter.
• 41.4% of the firms surveyed expect to have higher profits in the next three months, compared to 9.3% last quarter.
