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2nd Quarter 2015
Orange County Business Expectations Survey, OCBX
2nd Quarter 2015
Project Director: Anil K. Puri, Ph.D.
This survey of OC business executives was conducted during Mar. 25 – Mar. 30, 2015. 49 executives
responded for a response rate of approximately 9%.
Orange County Business Expectations:
OCBX Index
nd
The overall index, OCBX, for 2 quarter 2015
improved to 92 compared to the value of 91.5 in the 1st
quarter 2015. The OCBX index is a measure of overall
view of the economy and it is constructed from other
variables in the survey. A reading of above 50 indicates
future growth in the economy. In Orange County, the
business executives continued to feel better for the third
quarter in a row.
Orange County Business Expectations:
OCBX Index
100
93.9
91.6
Own Industry Activity Survey Results
72.9% (64.6% in the previous quarter) of the executives
expect significant or some growth in their own industry.
6.3% of businesses predict some decreases in their
industry (compared to 4.2% previously). A 20.8%
(31.3% previously) of Orange County firms believe that
their own industry will remain stable. There appears to
be little change in the own industry’s growth prospects.
92.0
88.1
83.8
85.7
80
60
Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15
Overall Business Activity
The proportion of owners, CEOs, and managers that
expect overall business activity to improve or stay the
same was 94% in the 2nd quarter 2015 compared to 94%
for the 1st quarter 2015. In other words, no change. This
variable measures responses to questions about Orange
County executives’ own industry as well as their
outlook for the regional economy.
91.5
88.8
85.2
Overall Business Activity:
Expect Increase or No Change
100%
95%
96%
94%
92%
90%
94%
91%
88%
89%
75%
Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15
Expected Local Industry Activity
Over the Next Three Months
Decrease
Somewhat , 6.3%
Decrease
Significantly ,
Increase
0.0%
Significantly ,
8.3%
Remain
Stable ,
20.8%
Increase
Somewhat ,
64.6%
Institute for Economic and Environmental Studies, IEES,
Mihaylo College of Business and Economics, California State University Fullerton
Orange County Business Expectations Survey, OCBX
2nd Quarter 2015
Project Director: Anil K. Puri, Ph.D.
Employment
43.8% of firms surveyed intend to make no change in
their labor force (compared to 53.1% in the last
quarter), 52.1% intend to hire more (compared to 42.9%
last quarter) and 4.2%, expect to cut jobs (4.1% in the
last quarter). A much higher number of firms intend to
increase their employment.
Expected Employment
60%
52.1%
43.8%
40%
20%
4.2%
0%
Increase
Sales/Revenues
70.8% of the firms surveyed expect their sales to
increase this quarter (compared to 77.6% in the last
quarter), 25% expect little change (compared to 22.4%
the last quarter) and a 4.2% expect to have lower sales
(compared to 0% in the last quarter). Sales increase
expectations seem to have improved for the third
quarter in a row.
70%
70.8%
60%
50%
40%
30%
25.0%
20%
10%
4.2%
0%
Increase
Unchanged
Decrease
Expected Operating Profits
70%
65%
62.5%
60%
55%
50%
45%
40%
33.3%
35%
30%
25%
20%
15%
10%
4.2%
5%
0%
Increase
Inventory/Equipment Investment
The percentage of those who said that they expect to see
inventories increase was 31.3% compared to 36.2% in
the last quarter. The share of those expecting the
inventories to remain unchanged increased to 60.4%
from 59.6% and those who were expecting to reduce
inventories decreased to 8.3% from 4.3%. The picture
for inventories is expected to improve in the coming
quarter.
Decrease
Expected Gross Sales/Revenue
80%
Operating Profits
62.5% of the firms surveyed expect to have higher
profits in the next three months (compared to 62.5% last
quarter), 33.3% expect no change (compared to 31.3%
from last quarter) while 4.2% expect lower profits
(compared to 6.3% last quarter). Profit expectations for
the coming quarter have stayed the same compared to
the last quarter.
Unchanged
80%
Decrease
Expected Invest. in
Inventory/Equipment
60.4%
60%
40%
Unchanged
31.3%
20%
8.3%
0%
Increase
Unchanged
Decrease
Institute for Economic and Environmental Studies, IEES,
Mihaylo College of Business and Economics, California State University Fullerton
Orange County Business Expectations Survey, OCBX
2nd Quarter 2015
Project Director: Anil K. Puri, Ph.D.
Most Significant Factors
The concern over the state of the overall economy
declined to 27.1% (compared to 35.4% last quarter), for
the second quarter in a row. Government regulation was
the second major concern with 35.4% (compared to
33.3% last quarter). Labor costs continues to be a
concern with 10.4% rating (Compared to same 8.3%
last quarter) while tax concerns increased to 10.4%
form 6.3%. The concern over international competition
remained at 2.1.
Most Significant Factor Impacting
Your Company
Overall
Economy
27.1%
Labor Costs
International 10.4%
Competition Inflation
2.1%
0.0%
Taxes
10.4%
Other
12.5%
Government
Regulations
35.4%
Credit
Availability
2.1%
Size of Firms included in OC.X
Index: 9mployment Levels
Sample Firm Size
Over 35.4% of the firms who responded to the survey
employ more than 100 workers, while 35.4% had fewer
than 20 employees and the rest, 29.2% had between 20
and 100 employees.
Over 1000
12.5%
22.9%
100-1000
50-100
16.7%
20-50
12.5%
5 to 20
27.1%
1 to 5
8.3%
0%
California Economy vs. U.S. Economy
[SPECIAL QUESTION]
In this special question, we asked executives about their
opinion of the relative speed of recovery of the
California economy compared to that of the nation.
27.1% (compared to 22.4% last quarter) felt that the two
economies will move in tandem. 22.9% (compared to
30.6% last quarter) felt that California will lag the
nation while 50% (compared to 46.9% last quarter)
believe that the state will grow faster than the nation.
This is the first time since the recession started that
almost a majority feel that California’s growth will be
faster than that of the US economy.
5%
10%
15%
20%
25%
30%
California Economy vs. National Economy
80%
60%
50.0%
40%
27.1%
22.9%
20%
0%
California will perform California will lag the
California will grow
the same as the
national economy faster than the national
national economy
economy
Institute for Economic and Environmental Studies, IEES,
Mihaylo College of Business and Economics, California State University Fullerton