Region's Firms in Upbeat Mood

Region's firms in upbeat mood
More than 1 in 3 surveyed say they expect to be hiring

Tom Abate, Chronicle Staff Writer

Wednesday, August 10, 2005

Businesses in the region remain optimistic about their prospects, the direction of the regional economy and the outlook for hiring according to a survey scheduled for release Wednesday.

"For the second quarter in a row, very large, medium and small companies are all planning significant hiring,'' said Jim Wunderman, president of the Bay Area Council, a business-backed public policy group that issues quarterly surveys of local business sentiment.

Based on interviews with 515 Bay Area business leaders representing a mix of firms by size and industry, the Council pegged the region's business confidence index at 62, up from 59 when the last survey was taken in the spring.

The index is a sliding scale in which zero would represent hopelessness and 100 nirvana. The current reading indicates a "significant uptick in optimism," Council spokesman John Grubb said.

About 38 percent of the business leaders surveyed said they expected to add staff in the next six months, while an additional 51 percent expected at least to keep payrolls steady. Only 8 percent said they expected to trim employees, while the remaining 3 percent were unsure.

In the spring, expansion plans were similar, with 39 percent of businesses surveyed expecting to increase their Bay Area workforces by year's end. A year ago, the Council's survey found that 30 percent of businesses expected to hire additional staff.

Council leaders said the current survey, conducted in the latter part of July, found firms of all sizes relatively bullish. In the recent past, smaller firms had been more confident about hiring than larger ones, Grubb said.

The Council found widespread optimism in both hiring and overall outlook throughout the region. Still, Santa Clara County, heart of hard-hit Silicon Valley, remains somewhat more pessimistic.

For instance, 16 percent of the firms surveyed in Santa Clara County expected payrolls to decrease in the next six months -- more than double the overall Bay Area rate.

By industry, 52 percent of the travel and leisure firms, 43 percent of professional services companies, 40 percent of financial activities firms and 39 percent of construction companies expected to add staff.

Brian Garrett, president of the Community Bank of the Bay in Oakland, a lender that specializes in small and inner-city clients, said the real estate boom is driving activity in a number of areas, notably small shopping centers and retail startups.

Sanjiv Bhandari, principal at BKBC Architects in Walnut Creek, said a surge in custom residential, small housing developments and retail expansion has allowed his firm to grow to six people from four last year -- with the possibility of creating a couple of new positions to handle anticipated work.

Even in San Jose, which is still struggling to rebound, Bob Scarborough, president of softwaremaker Tensoft Inc., said his 22-person firm doubled its sales in 2004 and added five people in the process. The company sells software to technology firms to help them increase productivity in order compete worldwide.

The spreading sense of optimism in firms of all sizes, in different locations and industries, is making Wells Fargo Executive Vice President Steven Bojkovic, a 22-year veteran of business lending in the Bay Area, sound upbeat.

"For the first time in recent history, we're starting to see the Bay Area ready to start firing on all cylinders,'' he said.


--------------------------------------------------------------------------------

Bay Area business confidence

-- The Bay Area Business Confidence Index rose to 62 in August from 59 in May.

-- 38 percent of firms said they planned to hire in the next six months, down from 39 percent in previous survey.

-- 8 percent of firms said they expected to cut staff, up from 7 percent..

Source: Bay Area Business Council

E-mail Tom Abate at tabate@sfchronicle.com