Survey: Local businesses slightly more confident
| Wednesday, Nov 18 2009 05:56 PM
Last Updated Wednesday, Nov 18 2009 06:12 PM
This article first appeared in the Kern Economic Journal, 2009 Third Quarter issue. The journal is a quarterly publication of Cal State Bakersfield. Economics professor Abbas Grammy is the publisher and managing editor. The entire journal is posted at csub.edu/kej.
Data from our recent survey indicate that Kern County businesses have turned optimistic about local economic conditions. In the third quarter (July through September) of 2009, the Business Outlook Index improved 1 point. The index stood at 109 compared to 108 in the previous quarter and 88 four quarters ago.
The survey data are somewhat encouraging because the index value remained in the range of optimistic perceptions.
Kern County's Business Outlook Index is compiled from telephone surveys administered to a random sample of local business managers listed in various telephone directories.
Index values above 100 indicate optimism, while values below 100 suggest pessimism. The intent of the survey is to help business managers make more informed decisions given local economic trends. Survey results also enable investors to assess the potential for local economic growth based on the degree of business confidence.
To make an in-depth analysis of business confidence, we disaggregated the Business Outlook Index into two subindexes relating to recent and future business perceptions.
The Current Conditions Index climbed 2 points to arrive at 107. Likewise, the Future Conditions Index gained 2 points to reach 111. These improvements indicate that local business managers are slightly more optimistic about current and future economic conditions than the previous quarter.
Employment outlook
Sixty percent of interviewees reported that the number of jobs in their companies stayed constant this quarter, while 24 percent said more jobs were available in their companies and 16 percent reported reduced employment.
Likewise, 61 percent perceived that the number of jobs would stay constant next quarter, whereas 28 percent expected their companies to hire more workers. The remaining 11 percent anticipated a smaller workforce.
Financial outlook
Fifty-nine percent of survey respondents reported that the financial conditions (sales and profits) of their companies were constant this quarter, whereas 24 percent indicated increased profits and sales and 17 percent stated lower profits and sales.
Similarly, 64 percent expect financial conditions of their companies to remain constant next quarter. However, 22 percent anticipate increased sales and profits and 14 percent predict lower sales and profits.
Industry outlook
Sixty-seven percent of survey respondents perceived that the employment and general business conditions of their industries remained the same as the previous quarter, while 20 percent felt these conditions improved and 13 percent felt crumbling business conditions.
Sixty-one percent anticipate that the employment and general business conditions of their industries will be unchanged next quarter. However, 25 percent expect progress and 14 percent feel otherwise.
Economic outlook
When asked about Kern County's economy, 59 percent of interviewees perceived no improvement this quarter. Nevertheless, 23 percent felt conditions improved and 18 percent said conditions worsened.
Likewise, 54 percent feel that economic conditions will be unchanged next quarter. However, 28 percent anticipate the economy will get better and 18 percent feel conditions are likely to get worse.
Factors affecting business outlook
We asked business managers to identify factors that have affected employment and financial conditions of their companies. They felt several factors brightened the business outlook:
Increased Internet sales.
Workers are willing to get jobs at lower wages.
Increased exports of farm products.
However, survey respondents expressed the belief that several factors darkened the business outlook:
High health-care premiums paid for employees.
Difficulty in borrowing money for business expansion.
Continued recession and high housing foreclosures.
