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CSUF: Execs Have Sunnier Outlook

Orange County business executives’ outlook for the last three months of this year has picked up significantly, although many say reaching pre-pandemic levels of business won’t happen until after 2021, according to a survey conducted by economists at California State University-Fullerton.

The Orange County Business Expectations, survey’s overall index, the OCBX, for the current quarter improved to 80.9 from 62.9 in the previous three months.

“The index is still below the levels reached in the last several years but shows significant improvement from the last two quarters,” Anil Puri, lead economist and director of the university’s Woods Center for Economic Analysis and Forecasting, told the Business Journal.

“Economic conditions today are better than they were at the time of the last survey at the end of June. Executives are feeling better.”

A reading of above 50 for the OCBX indicates belief in future economic growth, and the index itself is a measure of the overall view of the economy.

The OCBX Index dropped to 22.7 for the second quarter, the lowest it’s been since the depths of the Great Recession of 2008-2009, as the coronavirus crisis swept across the world.

At the start of 2020, the index stood at 92.9.

Hiring Trends

The latest quarterly survey called the OC hiring picture “relatively stable” with almost 20% of firms that responded intending to increase their labor force in the final quarter, down a bit from around 23% in the previous quarter. Almost 70% of the firms surveyed intend to make no change.

Businesses “are not ready to hire more people. They’re not going to hire more people even though they expect sales to get better,” Puri said.

Puri cited Walt Disney Co.’s announcement last week to lay off 28,000 employees across its park division, including Disneyland Resort in Anaheim. Disney is Orange County’s largest employer and its local theme parks have been shuttered since March. It’s the only Disney park to remain closed.

“That’s going to put further pressure on the workforce.”

Orange County’s unadjusted unemployment rate fell to 9.9% in August, down from a revised 12.4% in July.

Politics a Concern

A cumulative two-thirds of business executives surveyed by the Woods Center team believe they will reach pre-pandemic business levels by the end of 2021 while the remainder said that will happen in 2022 or beyond.

Other key points from the quarterly OCBX survey:

• The proportion of owners, CEOs, and managers who expect overall business activity to improve or stay the same improved to 64% for the fourth quarter.

• Almost 46% of the firms surveyed expect their sales to increase this quarter.

• A growing number of executives think the “political and social conditions currently gripping the country pose a major threat to the economy and business”—just over 78% compared to almost 72% last quarter.

The survey of more than 500 OC business executives was conducted from September 16-25.

Better Numbers

Frank Weber, a director at consulting and financial services firm Talley LLP in Orange, told the Business Journal that “many of our clients predict better numbers next year after this election gets behind us.”

“I think many companies were having trouble getting employees to return since the government relief was very generous,” Weber said.

Despite the economic uncertainty, notable OC companies are still hiring. For example, Irvine-based video game company Blizzard Entertainment Inc. had website postings for 223 positions as of last Thursday while data analytics software maker Alteryx Inc. posted 47 open slots.

William Wang, co-founder and CEO of flat-panel smart TV maker Vizio, told the Business Journal before the survey was released that his company is “doing well and hiring.”

“I am very optimistic about the future employment rate trend here in the county,” he added. His company has been growing its presence in the media sector.

Waiting for Vaccine

Anil Puri, director of the Woods Center for Economic Analysis and Forecasting at California State University-Fullerton, last week spoke to the Business Journal after releasing the latest quarterly business expectations survey for Orange County.

Here are some of his key takeaways:

• “People are buying goods and services, they’re moving around. So, (companies’) sales are getting better and they expect higher profits. But they are not very sure about this recovery—whether it is going to last through this last quarter and well into next year.”

• Businesses “are not ready to hire more people. They’re not going to hire more people even though they expect sales to get better.”

• Companies will stay “cautious about hiring more people,” although to truly improve the economy, “we need to get people back to work.”

• “We will not get clarity on the economic situation until we get clarity on the vaccination.”

• While the expectations for getting back to pre-pandemic levels vary, “business people by their very nature are optimistic.”

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal
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