Santa Clara University: Upturn in Silicon Valley Index Reflects Improving Business Conditions; Respondents Say Real Estate Prices Will Have Little Effect on Hiring

Business Wire, May 27, 2005

SANTA CLARA, Calif. -- Business leaders in Silicon Valley say that economic conditions are better than they have been in the recent past, and will continue to improve modestly over the next six months, according to Santa Clara University Business School researchers who conduct a monthly survey of area executives and senior managers.

"The upturn reflects positive news in employment numbers for Silicon Valley," said Mario Belotti, W.M. Keck Professor of Economics in the Leavey School of Business at SCU. "The April Santa Clara County labor report shows slow but steady growth in employment over the first quarter of 2005," he said. "Part-time employment gains are increasing at a faster pace, and this generally leads to future growth in full-time payroll numbers."

"In addition, the R&D and office space vacancy rate is 7 percent lower now than a year ago, indicating that we're seeing businesses preparing for growth," said Belotti.

The survey, conducted the week of May 15, showed the index of current economic conditions climbed from 54.92 in April to 57.50 this month. SCU faculty said this shows survey respondents see a sunnier economic climate for their companies (and that of their customers) than six months ago. The future looks even brighter, with the forward-looking index reaching 60.08, after languishing in the 50s since mid-2004.

When asked whether Silicon Valley real estate prices would continue to rise, about two-thirds of the respondents (64.9 percent) said yes, predicting increases ranging from 1 percent to more than 10 percent, said survey managers. Participants were also asked to gauge whether real estate costs would make it more difficult to attract and retain talent. SCU researchers reported that little more than half the group (52.2 percent) said it would have little or no effect, signifying managers thought the regional talent pool was large enough to satisfy their organization's needs currently.

Since February 2002, the SCU Business Index has asked managers and executives in a wide range of businesses in Silicon Valley to assess their business prospects for the next six months, and compared to the past six months, as well as current and future availability of jobs in their companies. It is managed for the Leavey School of Business by The Survey Company. Complete SCU Business Index results and methodology for April and earlier months can be found at www.surveycompany.com/SCUBI_05/index.htm

Media: Mario Belotti is available to comment on survey results and on business conditions in Silicon Valley. Call 408-554-5125 or 408-554-2162 to arrange an interview with him.

About the Santa Clara University Business Index survey

This monthly business indicator, the only one of its kind for the Silicon Valley region, is a composite index that every month tracks business conditions in Silicon Valley companies and their markets, as well as trends in job availability in the region, by polling the region's executives and managers.

About the Leavey School of Business

The Leavey School of Business at Santa Clara University began in 1926, and was one of the first business schools in the country to receive national accreditation. Its undergraduate business program is recognized as one of the best in California, and its MBA program is ranked 10th in the nation among part-time graduate programs for working professionals. More than 80 percent of its 1,100 MBA student body are working professionals in the Bay Area.

About Santa Clara University

Santa Clara University, a comprehensive Jesuit, Catholic university located in California's Silicon Valley, offers its 8,213 students rigorous undergraduate curricula in arts and sciences, business, and engineering, plus master's and law degrees. Distinguished nationally by the second-highest graduation rate among all U.S. master's universities, California's oldest higher-education institution demonstrates faith-inspired values of ethics and social justice. More information is online at www.scu.edu.