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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (41507)	11/15/2003 11:45:39 PM
From: calgal	Respond to of 74559

Re-Post: Economic confidence growing in Bay Area SURVEY: CEOS SEE A RECOVERY By David A. Sylvester Mercury News Confidence among Bay Area top executives in the local economy -- and their industry -- has risen to its highest level in more than a year, giving greater hope for future improvement, according to a new survey released Monday. ``This is a very good sign,'' said Sunne McPeak, president of the Bay Area Council, which conducts the quarterly survey. Rising confidence in the recovery is important because it usually means that businesses will invest more to expand production to meet increasing demand for their products. Among local executives, however, most are expecting a moderate recovery, not a strong, substantial one, according to the council's survey. In addition, they are worried about the erosion of the Bay Area's business climate, primarily because of the high cost of housing. The CEOs, particularly at large business with more than 10,000 employees, rated the Bay Area's climate as worse than California's overall and much worse than the nation's. McPeak said rising dissatisfaction with the business climate could become serious enough to threaten the recovery. Executives saw high labor costs as well as taxes as major problems, especially among the bigger companies. The survey was conducted among 515 CEOs and senior executives during mid-October by the polling firm Evans/McDonough and developed by McKinsey & Co. The Bay Area Council began the survey during the fourth quarter of 2001. False recovery This fourth quarter's confidence is measured by an index level of 60, which is the highest since the second quarter of 2002. The index is a number that represents the composite of answers to the survey questions. Business confidence rose then, during what proved to be a false recovery, and later sank for most of late 2002 and early 2003, according to the survey. It has risen sharply for two quarters in a row. Just as more executives are optimistic, fewer are pessimistic. In October, 64 percent of those polled believe the Bay Area's economy will improve over the next six months and only 6 percent believe it will deteriorate, the survey showed. Asked about their industry's prospects, 48 percent expected a moderate improvement and only 5 percent expected a substantial improvement. In addition, 40 percent expect the same conditions in six months. They are more optimistic for the Bay Area's economy overall. Among those polled, 60 percent are optimistic about a moderate improvement and 29 percent expect the same conditions. Bay Area improved At the same time, an increasing number of executives recognize that business has improved in the Bay Area over the past six months. In the survey, 40 percent said the local economy has improved moderately since the second quarter when only 8 percent said it had improved. Now, 48 percent said it is the same as six months ago, but in the summer, 41 percent said it was the same. Only 10 percent said it was moderately worse this quarter, compared with 44 percent during the second quarter who said it had become worse over the past six months.