Sonoma County Business Confidence Report Winter 2013

7/29/2019 Sonoma County Business Confidence Report Winter 2013

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Business Confidence ReportWinter2013

2013S O N O M A

C O U N T Y


2/9

Winter 2013 Business Confidence Survey and Report

February 2013

The Sonoma County Economic Development Board (EDB), in partnership with the Sonoma

County Workforce Investment Board (WIB), is pleased to present the Winter2013 Business

Confidence Survey and Report.

Highlights from this Business Confidence Reportinclude:

The business confidence level for Sonoma County reached a new 6-year high in the

Winter of 2013 with a score of 6.36. When business executives considered their specific

industry in Sonoma County, the average confidence level rose slightly to 6.39.

The Economic Development Boards Purchasing Trends Index (PTI) was 70 this winter

making this the second year that Sonoma County has scored higher than the UnitedStates since 2007. This indicates that business feel less economically challenged operat-

ingin Sonoma County than in the US as a whole. Any score above 50 indicates thatSonoma Countys economy is expanding.

There are moderate expectations for wage and salary increase over the next year with33% of business anticipating increases of 1-2%, and 11% anticipating an increase of over

2%. An increase in wages and salaries reflects returning confidence in the economy, and

will help drive demand for goods and services in Sonoma County.

The business outlook over the next six months for Sonoma County is positive in several

industries. A large proportion of businesses reported wholesale profits and investments in

locations and equipment are expected to increase in the future.

Thank you for your interest in the Economic Development Boards research. For additional

information, questions, comments, or suggestions please contact us at (707) 565-7170 or

visit www.sonomaedb.org.

Sincerely,

Ben Stone

Executive Director

2011 Sonoma County Economic Development Board. The Economic Development Board (EDB) believes all datacontained within this report to be accurate and the most current available, but does not guarantee its accuracy orcompleteness. Use of data from an outside source does not represent an endorsement of any product or service bythe EDB, its members or affiliates. This publication can be made available in alternative formats such as Braille, large

print, audiotape, or computer disk. Please direct requests to (707) 565-7170 and allow 72 hours for your request to beprocessed. This report was prepared by Matthew Liedtke.


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Business Confidence

The business confidence level for Sonoma County

reached a new 6-year high in the Winter of 2013 with a

score of 6.36. In a survey conducted by the Economic Devel-

opment Board, business executives were asked their percep-

tion of current economic conditions in Sonoma County on a

10-point scale, with a score of 1 representing the lowest

possible confidence level and 10 the highest.When asked to

judge the current economic conditions solely in their industry,as opposed to Sonoma County as a whole, business execu-

tives expressed higher confidence with a score of 6.39.

Business confidence in Sonoma County has been

strengthening since the recessionary period of 2007-08.

Since hitting a low of 3.2 in the winter of 2008, confidence

has soared by nearly 100%. With confidence returned to

pre-recession levels, businesses will be more inclined to step

up hiring, make capital investments, and increase production.

Comparing business executives opinion about the perfor-

mance of their industry currently and over the next six

months shows an optimistic trend. The survey reveals that

during this period the average confidence level of Sonoma

County rises to 6.5. When business owners where asked

about confidence in their specific industry, the average antici-

pated confidence level dipped to 6.39. Industry results were

also mixed, with several indicating no change in confidence.

During the Summer of 2012, when the EDB conducted its last

business confidence survey, the six month forecasted confi-

dence was 5.3. It is certainly encouraging to see business

executives more confident than anticipated while adding

another successive year of growth.

www.sonomaedb

.org2

Business Confidence, 2013 Q1

Average ConfidenceLevel for Sonoma

County: 6.36

0

5

10

15

20

25

30

35

40

10987654321

Response

Frequency

ofRespon

se

Business Confidence, 2001-2013 Q1

Summer 066.80

Winter 136.36

Winter 08

3.20

3

4

5

6

7

'1'12'11'10'09'08'07'06'05'04'03'02

Agriculture

Technology

Prof/Financial

Services

Retail/W

holesale

Trade

Manufacturing

Hospitality

RealE

state

&C

onstruction

HealthS

ervices

Non-P

rofit/

Governm

ent

Other

Sonoma County Confidence Growth Within IndustriesCurrent vs. Next 6 Months

Education

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

0% 0%0%0%0%

Average ConfidencLevel by Industry:

6.39

Sonoma County Confidence Within Industries

Educ

ation

Othe

r

Real

Esta

te&

Cons

tructi

on

Tech

nolog

y

Prof

essio

nal&

Fina

ncial

Servic

es

Healt

hSe

rvice

s

Nonp

rofit/

Govt

Agric

ultur

e

Man

ufac

turin

g

Reta

il/Who

lesale

Distr

ibutio

n

Industry Confidence Over

the Next 6 Months

Current Industry

Confidence Level

Hosp

itality

0

1

2

3

4

5

6

7

8

9

10


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Purchasing Trends

The Purchasing Trends Index (PTI) value for Sonoma County

in the Winter of 2013 was 70. An index score above 50

indicates that the economy is expanding. The PTI survey

measures a companys performance in key industry metrics over

the past two quarters. This marks the second year that

Sonoma County has scored higher than the United States

since 2007.This indicates that business feel less economi-

cally challenged operating in Sonoma County than in the USas a whole.

By industry, technology has the highest PTI index value at

79 points, followed by agriculture with 76, and the other

category with 72. Businesses that identified themselves by

other where primarily in the tourism, media, and transportation

industries. High index values imply that these industries

performed especially well over the last two quarters.

Breaking the PTI down into its components allows us to identify

areas in which each industry did especially well and also where

businesses struggled. Two components, new customer orders

and production, indicated rapid expansion by scoring above

a 70 in each industry. The magnitude of the scores in new

customers further suggests that more consumer spending

is a main driver of Sonoma Countys economic performance.

The results in the employment component were positive, with

industries indicating that they are hiring more employees or

providing more hours for current employees.

www.sonomaedb.org3

10

20

30

40

50

60

70

80

'13'12'11'10'09'08'07'06'05

Purchasing Trends Index, 2005-2013 Q1

70

Sonoma County

National

Source: Institute for Supply Management (www.ism.ws)

PTI By Industry

0

10

20

30

40

50

60

70

80

Agricultur

e

Techno

logy

Retail/W

holes

ale

Trad

e

Man

ufacturin

g

RealEs

tate

&Co

nstru

ction

Othe

r

PTI By Industry Metric

Agriculture

NewCustomer

Orders Production EmploymentSupplier

Deliveries Inventories

Technology

Retail/WholesaleTrade

Manufacturing

Real Estate& Construction

Other

500 50 50 50 50 100


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Looking Forward

The business outlook over the next six months for

Sonoma County is positive in several industries. A large

proportion of businesses reported wholesale profits and

investments in locations and equipment are expected to

increase in the future. While employment and exports

showed strong performance, the majority of respondents

indicated that these categories would remain unchanged.

The employment outlook for agriculture and manufactur-

ing are among the strongest of all industries, with 67% and

61% of business executives anticipating a hiring increase,

respectively. On the other hand, health services reported a

negative outlook, with 50% predicting a decrease in employ-

ment.

The six month investment outlook broken down by indus-

try shows strong expectations across the board and most

notably in agriculture, and non-profits and government.

About two-thirds of business executives in hospitality, technol-

ogy, and manufacturing have a positive attitude towards invest-

ments over the next six months. In contrast, health service

representatives reported a negative-neutral outlook.

When asked their attitude toward significant capital

expenditures, the majority of business executives

responded that they were cautious. Capital expenditure is

important for the continued growth of infrastructure and

productivity of Sonoma County. Uncertainly regarding both the

United States and European economies prevents capital

expenditure because businesses are not sure they will return a

profit on their investment.

www.sonomaedb.org4

0%

10%

20%

30%

40%

50%

60%

70%

80%

6-Month Business Outlook

Increase

Decrease

No Change

Investments

in Locations-

Equipment

Full-time

employees

ExportsNet Profits

0% 20% 40% 60% 80% 100% 120%

Employment Outlook by Industry

Increase Decrease No Change

Agriculture

Technology

Prof/FinancialServices


Manufacturing

Hospitality


Health Services

Non-Profit/Government

Other

Education

Attitude Towards Significant Capital Expenditures

Aggressive

Moderate

Cautious

54.5%34.6%

10.8%

0% 20% 40% 60% 80% 100%

Investments Outlook by Industry

Increase Decrease No Change

Agriculture

Technology



Manufacturing

Hospitality


Health Services

Non-Profit/

GovernmentOther


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Special Focus - Salary Projections

The Economic Development Board polls businesses on special

topic questions in each survey that are pertinent to current

economic issues. This survey asked about changes in wages

and salaries in Sonoma County for 2013.

There are moderate expectations for wage and salary

increase over the next year with 33% of business anticipat-

ing increases of 1-2%, and 11% anticipating an increase ofover 2%. About a third of business executives expect no

change. During the recession, business shifted more responsi-

bilities on each employee while keeping pay flat in an effort to

decrease costs. An increase in wages and salaries reflects

returning confidence in the economy, and will help drive demand

for goods and services in Sonoma County.

The majority of business executives expect the unemploy-

ment rate to fall over the next six months with 46.7% antici-

pating a decline, 41.1% anticipating no change, and 12.2%

anticipating a rise.

In the business confidence survey, the EDB asked when the

economy is expected to be back on track. The economic expec-tations of business executives are important factors in hiring and

capital expenditures. The majority believe it will be at least

two years, with 32% saying 2-3 years, and another 32%

saying 3+ years. Nearly 10% expect it will take less than a

year.

www.sonomaedb.org5

0-1%

1-2%

2% +

How do you anticipate wage and salary rates tochange in Sonoma County next year?

32%

11%

2%

No Change

Less than -1%

22%

33%

Decline

No Change

Rise

How you do you predict the national unemploymentrate to change in the next 6 months?

46.7%

41.1%

12.2%

0% 20% 40% 60% 80% 100%

3+ years

2-3 years

1-2 years

6-12 months

1-6 months

Agriculture

Technology



Manufacturing

Hospitality


Health Services


Other

When do you expect the economy to be back on track?

By Industry

Education

Total

32%

32%

27%

8%

1%


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Respondent Summary

The Economic Development Board distributed 234 surveys

representing 11 industry sectors in order to gather opinions

about the confidence of Sonoma Countys businesses. The

EDB received 106 surveys in response, for a response rate

of 45.2%. This is a high enough response rate to construct a

snapshot of the business sentiment in Sonoma County.

The EDB attempted to survey a broad range of businesseswhen conducting the Business Confidence Survey. Using

NAICS designations, we asked respondents to match them-

selves to the industry that closest represented their business.

The four most represented industries responding to the

survey were Professional and Financial Services (17.8%),

Other (16.8%), Retail and Wholesale Trade (15.9%), and

Real Estate and Construction (14.0%). Agriculture, Health

Services, and Education were the least represented industries.

The most common business size of those that responded

was in the 16-50 range. The 51-100 range had the second

highest frequency, with 22 firms reporting that many employ-

ees. The third highest was 1-15 employees, with 21 respond-

ing firms having that many employees. There were 10 total

firms that had either 250-500 or 500+ employees. This shows

a good representation of small, medium, and large businesses

included in the EDBs survey.

www.sonomaedb.org6

Response Rate

Did Not Respond

Responded

Total Number ofDistributed Surveys:

234

45.2%

Respondents by Industry

17.8%

16.8%

15.9%14.0%

13.1%

11.2%

0.9%

Agriculture

Technology

Prof/Financial Services

Retail/Wholesale Trade

Manufacturing

Hospitality

Real Estate & Constructio

Health Services


Other

Education

1.9%2.8%

2.8%

2.8%

Number of Employees per Firm

0

5

10

15

20

25

30

35

500+251-500101-25051-10016-501-15

Number of Employees

Frequency

ofRespon

se


8/9


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Economic Development Board

401 College Avenue, Suite D

Santa Rosa, CA 95401

(707) 565-7170

www.sonomaedb.org

With acknowledgement and appreciation to local key businesses

supporting Sonoma County Economic Development:

Director

Sponsors

Executive

REPUBL IC

CALIFORNIA

AGR I CULTURE

I NDUSTRY

RE CREAT ION

SONOMA

COUN

TY

County of Sonoma Board of SupervisorsSonoma County Health Services

Documents

Sonoma County Business Confidence Report Winter 2013