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Silicon Valley Business Index still in positive territory, but lack of job creation is a concern

Monday, Aug. 1, 2005

SANTA CLARA, Calif. -- July 28, 2005 - Silicon Valley’s business sentiment continues to be generally positive, with the scarcity of jobs a continued underlying concern, according to a team of Santa Clara University business faculty which conducts a monthly survey of business leaders in the Bay Area.

The survey highlights a characteristic of both the national and local economies, said Robert Hendershott, associate professor of finance in the Leavey School of Business at SCU. “Nationally, corporate profits are strong but job growth has been weaker than in the typical extended recovery,” said Hendershott. This disparity is magnified in Silicon Valley, as tech companies show healthy profits while area employment continues to stagnate.

The survey results confirmed the lack of movement in Silicon Valley’s job outlook over the past 12 months, said Hendershott, and further, survey respondents expected little improvement in job availability in their own companies during the next six months.

Valley businesses continue to be cognizant of rising interest rates.  When asked this month how rising interest rates would impact their business, 49 percent of survey respondents said the rate hikes would have a minor or substantial negative effect, while just 43.7 percent of the survey group thought so last year. On the positive side, however, some 15 percent thought interest rate increases would have either a minor or substantial positive effect, nearly doubling the 8.8 percent  who thought so in 2004.  Hendershott noted that high-tech businesses typically eschew heavy borrowing, making their costs less sensitive to rate fluctuations.

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. The survey is managed for the Leavey School of Business by The Survey Company. Complete SCU Business Index results and methodology for July and earlier months can be found at www.surveycompany.com/SCUBI_05/index.htm 

Media: Robert Hendershott is available to comment on survey results and on business conditions in Silicon Valley. Call 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 third-highest graduation rate among all U.S. masters’ universities, California’s oldest higher-education institution demonstrates faith-inspired values of ethics and social justice. More information is available at www.scu.edu.

Tags: SiliconValley

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