Consumer spending uptick behind upbeat outlook
Executives of Sonoma County businesses are more confident about the current and near-term future prospects for the local economy than 2006, when the local economy started slowing, and are even more positive about their own industries, according to report released today.
And the business outlook over the next six months for Sonoma County is positive in several industries, according to a periodic survey commissioned by the Sonoma County Economic Development Board.
The business confidence level for Sonoma County reached a six-year high in winter 2013 with a score of 6.36 out of 10. Local businesses have become more sure of their future since the recessionary period of 2007–2008. The confidence index hit a low of 3.2 in the first quarter of 2008.
The six-month outlook for the local economy that many months ago was 5.3. That suggests the economy continues to improve, according to the board’s report.
When business executives considered their specific industry in Sonoma County, the average confidence level rose slightly to 6.39.
The board’s purchasing trends index rating for Sonoma County was 70 this winter. A purchasing index score above 50 suggests economic expansion.
This is the second year since 2007 that the county’s index was higher than that of the U.S., suggesting Sonoma County business leaders feel less economically challenged than those in the U.S. as a whole, according to the economic development board.
Industries that are expanding the most are technology, with an index of 79, and agriculture, 76. An “other” category on the confidence survey scored 72 and included businesses in tourism, media and transportation.
Producer index metrics solidly in expansion territory for the industries surveyed were new customer orders and production, suggesting consumer spending is a major driver in the economic expansion, according to the report.
There are “moderate” expectations for wage and salary increase over the next year, according to the board report. One-third of executives anticipated pay increases of 1 percent to 2 percent, while 11 percent foresee an increase of more than 2 percent.
An increase in wages and salaries reflects returning confidence in the economy, and will help drive demand for goods and services in Sonoma County, according to the report.
The next six months appears positive for several Sonoma County industries surveyed. More than half the responding executives said they expect higher wholesale profits and more investments in locations and equipment.
More than two-thirds in agriculture-related businesses planned to hire in the next six months, and the rest expect no change. Almost as positive about hiring were hospitality, technology and manufacturing businesses. The most negative outlook came from health care executives, split between planning staffing cuts or no change.
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