Professional, Business Services Drive Labor

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ORANGE COUNTY, CA-As GlobeSt.com reported earlier today, the Orange County market has many upsides, according to this month's UCLA Anderson Forecast, including jobs, housing and the office market. Looking ahead, the labor market here is expected to continue to improve over the next 12 months, with growth rates similar to those of the previous 12 months, the Forecast predicts.

Confidence has improved and hiring is expected to remain strong, according to the report, thanks to a year of solid performance. Orange County's unemployment rate, already low by California standards, will continue to decline, reaching more normal levels by 2015. UCLA Anderson Forecast reports that the unemployment rate is expected to average 6.9% in 2012, 6.1% in 2014 and 5.2% in 2015.

In addition, the labor-market expansion is expected to continue to be driven by the professional and business-services sector. Over the next two years this industry will add almost 35,000 jobs, and while many of these will be temporary positions, they should give way to permanent ones as the recovery matures.

Education and healthcare are also expected to contribute a large number of jobs to the Orange County market. As the population continues to age, and as the medical field is able to treat a greater number of conditions, demand for health services will continue to grow, the Forecast predicts. In Orange County, this will result in almost 13,500 new positions by 2015.

Also, the financial sector should continue its rebound, and although it will be many years before it overtakes the bubble-era peak, continued progress is expected. Many of these jobs will be in the banking and real estate industries, as a stronger economy leads to greater loan origination and increased housing activity, the report says.

In addition, a rebound in real estate markets should lead to new construction jobs as housing production will need to increase to meet demand. Also, after several years of relative stagnation, inflation-adjusted salaries will begin to increase here over the coming years. And as the unemployment rate drops and the applicant pool shrinks, competition for workers will intensify. As a result, real salaries are expected to increase by an average of 1.3% over the next five years, the report says.

Jerry Nickelsburg, professor of economics at UCLA's Anderson School of Management and senior economist with UCLA Anderson Forecast, tells GlobeSt.com, “What we're seeing is vacancy rates are coming down and office-using employment is one of the growth areas. As unemployment decreases, office users will soak up more space and bring vacancy rates down, and that's going to spur construction of new space.”

Nickelsburg adds that while the relationship between decreasing unemployment and decreasing vacancy rates is not as tight as it once was because office users are being more conservative about space use, developers are looking to bring additional new space to the market. “Employment is in the positive zone, and we are looking for the office market to continue to improve.”

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