The Bay Area Council today released its winter Business Confidence Survey, and the results show that Bay Area CEO’s and executives are confident the region’s economy is stabilizing and meeting expectations in the post-recession recovery. The business confidence index – the number that distills the survey findings – registered at 61 out of 100, up 3 points from the last survey.
A reading over 50 signals positive economic times, while below 50 is negative. Last quarter’s Survey showed the index reading at 58 – making this the sixth positive reading in a row since the summer of 2009. One year ago, the reading registered 55, and in January 2009, the index reached its all-time low of 31.
“We’re seeing optimism and confidence in all private industry sectors,” said Jim Wunderman, President & CEO of the Bay Area Council. “According to our survey, the best place to look for a job over the next 6 months is in San Francisco, on the Peninsula and Silicon Valley, in industries like trade, professional and business services and IT. Another bright spot is that small and medium sized businesses are finally showing signs that they might be expanding their workforces over the next few months.”
The responses of the 485 CEO’s and top executives in the nine Bay Area counties surveyed between February 17th and March 8th, show that overall, 58% think Bay Area economic conditions are better than six months ago, up 11 points from last quarter’s survey. In addition, 61% said they expect a better Bay Area economy six months from now, up 8 points from last quarter.
The Survey indicates that a majority of executives, 53%, expect their workforces to remain the same over the next six months. However, 31% of executives stated they planned to increase their workforce. 45% of executives in San Francisco County and 38% of executives in Santa Clara County expect to increase their workforce over the next six months. Contra Costa County was the exception, with companies surveyed there expecting to increase their workforce by 23%, but also planning to decrease their workforce by 24% over the next six months – the highest reported decrease of all nine Bay Area counties.
Additionally, the Survey showed that 41% of Bay Area companies with 500-999 employees expect to increase their workforce over the next six months, an increase of 19 points since last quarter’s survey. 42% of Bay Area companies with 50-99 employees expect to increase their workforce over the next six months.
Executives in specific industries are showing much more confidence that things will be better in six months in their sector. 60% of executives in information technology, 62% of financial services executives and 67% of leisure and hospitality executives expect their industry conditions to improve. Confidence in the construction, education and health services industries remained flat, while 65% of government leaders surveyed expect their situation to get worse.
“While there remains substantial noise and uncertainty in the world from fiscal problems in Sacramento and Washington, D.C. to world events, clearly the local business signals are positive,” said Lenny Mendonca, Director at McKinsey & Company.