Silicon Valley Frontlines: Economic Outlook in the Valley Improving ... But Where Will There Be Jobs?

The large accounting and consulting firm KPMG just announced the results of it's latest survey of key executives in various industries and I'm glad to see the technology sector optimism, which bodes well for the near future in the Valley. I also note that "only a very small percentage of the respondents say they are considering or planning further headcount reductions". Given that 65% of the surveyed execs (not just tech) implemented headcount reductions as their major reaction to the recent economic turmoil, this is particularly good news. An extract from the survey is below the chart.

For those not paying attention, the Valley unemployment rate (San Jose metro area in the chart below) has soared to almost 12% in the last month, and is now well above the 9% or so rate we experienced in the aftermath of the dotcom implosion. History - and "jobless recovery" prognostications - suggest it will stay up there for a while. That 12% has hit people pretty hard. Here's a headline from The Daily Telegraph in the U.K:

"In California's Santa Clara county, the local food bank served 17pc more people in the year to May than it did in the previous 12 months. That month (May) alone, Second Harvest Food Bank's food connection hotline experienced a 71pc surge in first-time callers."

Silver lining: I'd suggest that, as cash starts to flow again into startups, new job creation will occur there all the way up through Facebook and Google, while the dinosaurs - the HP's of the Valley - continue to shave away the layers. And for start-ups the people can be had for less base cash (though you'd better offer performance incentives in the way of bonuses and equity in exchange).

Here's an extract from the KPMG press release:

Technology: Leading the Recovery

Two-thirds of technology executives in the survey believe their industry will recover more quickly than the national economy. Silicon Valley-based executives were even more bullish, with 77 percent of them saying their recovery would outpace the U.S. one.

Eight out of ten executives in technology expect business conditions in technology to improve next year, with 78 percent expecting stronger revenue and 72 percent expecting improved profitability.

"These results are in line with recent earnings reports in the technology sector," said Gary Matuszak, partner, global chair and U.S. leader for KPMG's Information, Communications and Entertainment practice. "While it's far from blue skies in the industry, the worst seems to be behind us."

via news.prnewswire.com