Orange County chief executives, business owners and managers took comfort in the big stock gains of 2006, an orderly housing slowdown and stable interest rates.
After two quarters of decline, sentiment among the group is rebounding, according to California State University, Fullerton’s quarterly business expectations survey.
The index is at 83.1 for the first quarter, a marked rebound from the fourth quarter and a six-month high. A reading of 50 or more indicates executives expect growth in the quarter.
Sentiment declined sharply for the fourth quarter, slipping to 69.9 from 81.7 or higher in the prior three quarters.
The rebound this quarter “has to do with continued low interest rates and a very healthy Christmas season,” said Anil Puri, dean of the College of Business and Economics at Cal State Fullerton. “It reflects the general upbeat consumer spending. So long as that stays healthy, it benefits all the businesses.”
The index hit a high of 94.9 in summer 2004. It hit a low of 31.6 at the start of the Iraq war in spring 2003.
This quarter’s reading is the highest since April’s 88.7.
Last quarter’s reading was the index’s most recent low, sinking below the previous low of 75.9 that came after 2005’s Hurricane Katrina.
This quarter, some 46% of respondents ranked the overall economy as their main concern, slightly up from 45% in the fourth quarter.
Businesses expect sales to increase,68% of respondents see sales rising in the first quarter, up from 66.7% in the fourth quarter.
“There’s a definite change from the last quarter in businesses’ perception about the state of the economy and their own businesses,” Puri said. “Their projections for the increase in revenue and profits have improved.”
For more on this story, see the Jan. 8 edition of the Business Journal.
