Expectations on Upswing for OC’s Top Executives
By SHERRI CRUZ
Business leaders have struck a confident tone after two years of peaks and craters, according to the Orange County Business Expectations Index for the fourth quarter.
The index hit 84.1 for the coming quarter, up from 76.6 last quarter and the highest it’s been since the survey began in early 2002. The survey is done by California State University, Fullerton in association with the Business Journal.
The index is designed to be sensitive in reflecting the overall mood of business executives, according to Anil Puri, dean of the College of Business and Economics at Cal State Fullerton and director of the survey.
A number higher than 50 means people are expecting an improved regional economy. About 14% of the 756 companies that were contacted responded. More than 35% of the respondents had more than 100 workers; 46% had fewer than 20.
“The bottom line is Orange County business people appear to be a little more optimistic than what the national picture shows,” Puri said.
The national sentiment is that businesses will do little to no hiring and keep inventories low, Puri said.
Local businesspeople plan to hire and increase investments in inventory and equipment. About 31% of the executives surveyed plan to hire; 60% intend to make no changes and 10% expect to cut jobs. Last quarter, 13% said they expected to lay off workers.
About 27% of respondents plan to increase inventory and equipment investment, versus 23% in the prior quarter, with 62% planning to keep investment steady. About 12% expect to make decreases, down from 17%.
One trend to watch: the number of companies planning to move or expand out of the state.
While two-thirds of respondents said they have no intention of moving their businesses out of California, a third said they were considering relocating at least part of their company. That includes about 5% of executives who plan to move all business activities outside the state.
The survey showed that the national economy remained the most important concern, though other issues are increasing.
Labor costs are the second most significant concern, an indication that businesses intend to hire, Puri said. Rising workers’ compensation premiums and healthcare costs are leading labor costs.
About 40% expect increases in their labor costs, compared to 36% last quarter. Government regulations weren’t far behind labor costs as the third most important concern.
On a bright note, OC executives are optimistic about sales increases and bigger profits in the fourth quarter. About 53% expect to have higher profits in the fourth quarter, versus 45% last quarter, and 61% forecast higher sales, a big increase from last quarter’s 48%.
