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Executive Sentiment Up

Business expectations for the first quarter rebounded from hurricanes and higher interest rates.

But rising labor costs stand to be a factor in 2006, according to a survey of Orange County chief executives, business owners and managers.

California State University, Fullerton’s first-quarter business expectations index is at 85.5, reversing a dip during the past two quarters.

The index was 75.9 in the fourth quarter and 83.6 in the third quarter. Its recent high was 91.3 for the second quarter of last year.

A reading of 50 or more indicates executives are bullish about prospects in the quarter. The index is done in association with the Business Journal.

The drop in the index during the past two quarters came as the Federal Reserve continued to raise interest rates and hurricanes hit the Gulf.

The overall economy continues to be the biggest concern, with 44% of those surveyed listing it as their main worry.

But rising labor costs now weigh as heavily as do government regulations, at 13% and 14% of respondents, respectively.

Roughly 74% of respondents expect their labor costs to jump in the first quarter, up from 49% in the fourth quarter survey.

“This is a significant change in the trend of moderate wage increases of the last year,” said Anil Puri, dean of the College of Business and Economics at Cal State Fullerton. “They are concerned that inflation is going up and wages have stayed very low for several years now. Everybody thinks labor costs will now start picking up.”

For more on this story, see the Jan. 9 edition of the Business Journal.

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