Orange County's corporate chiefs are bullish on 1988, according to researchers at UC Irvine.
Most county chief executives expect to do more hiring in 1988 than last year. They also anticipate heftier sales and profits for their companies, the University of California study found.
The findings are part of UCI's 1988 Orange County Business and Economics Studies, a forecast of the county's economic climate. Complete results of the study will be announced later this month.
The study, conducted from September to December, 1987, included interviews with 190 chief executives in the construction, manufacturing, transportation, retail and wholesale trade, and financial services industries. Only companies with 100 or more employees were included.
Executives were asked about their companies' plans for hiring and capital investment and their predictions on sales and profits.
The companies are more optimistic about their hiring plans for 1988 than they were a year ago. About 55% said they expected to increase hiring in 1988, while just 41% anticipated doing so in 1987, the study found.
In other results, 47% of the chief executives said they expect to increase capital investment this year, 84% predicted higher sales and 73% forecast an improved overall financial performance.
The stock market's 508-point drop Oct. 19 did not seem to alter the executives' upbeat outlook. Some interviews were conducted before Oct. 19, while others were completed later.
"The timing of this year's study provided us with an unexpected opportunity to compare the plans and forecasts of local executives before and after the crash," said Jone Pearce, an associate professor of administration who headed the project.
"As a group, the executives surveyed after the crash were just as positive, with no statistically significant differences in their overall hiring plans, profit forecasts or sales forecasts," Pearce said.
However, Pearce noted that certain industries became more bearish after the crash, while others were more bullish.
Before the crash, for example, 80% of manufacturing companies expected improved profits, while just 64% did so after the crash. But banks, savings and loans and real estate firms became more optimistic after the crash, with 67% predicting higher profits, contrasted with 40% before Oct. 19.
Pearce attributed the increased optimism of financial services firms to a drop in interest rates since the crash. Lower interest rates can sometimes benefit "interest rate-sensitive" industries, such as banking and real estate.
SOME OF QUESTIONS ASKED IN UCI POLL Do you plan to increase hiring in 1988?
Do you plan to increase investment?
Do you expect sales to be higher in 1988 than in 1987?
Do you expect improved financial performance in 1988?