Silicon Valley's economy this year is continuing to create jobs but at a slower pace, according to a survey released Tuesday.
The annual CEO Business Climate Survey by the San Jose-based Silicon Valley Leadership Group sketches a picture of a strong local economy, according to Carl Guardino, president of the leadership group. But that economy isn't creating jobs as quickly as it did last year and in 2011.
"If Silicon Valley were a car, the foot is still on the accelerator, but that foot has eased off slightly on the gas pedal," Guardino said. "The economy is still moving at a robust rate, but not quite as quickly as in the past two years."
An estimated 46 percent of the Silicon Valley companies that responded to the survey said they expected to increase the size of their local workforce this year, while 10 percent planned to reduce staffing levels.
That is below the 50 percent of responding area companies that expanded staffing levels in 2012, and far below the 60 percent that added jobs in 2011. The survey measured the responses of 177 CEOs and senior officers at companies in Silicon Valley.
"Concerns are continuing to grow about the economy in Europe and the slowing of the pace of growth in China," Guardino said. "But CEOs are still bullish about innovation and hiring overall in Silicon Valley."
It's not surprising that technology companies have scaled back their hiring plans, said Rob Enderle, principal analyst
with San Jose-based Enderle Research Group.
"Companies are just more cautious," Enderle said. "They don't want to lay off employees in case there is a significant upturn. And they also don't want to hire people if things remain uncertain."
The survey also suggests that job growth in the greater Bay Area and California overall may also slow down this year.
"Silicon Valley seems to be the state's equivalent of the canary in the coal mine," said Larry Gerston, a professor of political science at San Jose State University. "What happens here often leads the Bay Area and the state."
The Bay Area added just over 91,000 jobs in 2012, or about 40 percent of nearly 226,000 jobs that were added in California. And Silicon Valley -- in this case, consisting of the urban centers that cover Santa Clara County, San Mateo County, San Francisco and Marin County -- produced 27 percent of California's job gains in 2012 and 66 percent of all of the Bay Area job gains, this newspaper's analysis of state government figures shows.
"We are hearing across the board that in the tech sector, programming, engineering, support and service jobs -- those are all in high demand," said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, which tracks the tech sector. "Demand by companies for people with specialized technology skills remains strong."
The growth surge in Silicon Valley won't soon abate, Bajarin predicted.
"More people are adopting technology as part of their lifestyle, as you can see with the adoption of smartphones," Bajarin said. "And we are still a long way from full digital penetration. We have not moved to interactive television. We are a long way to the adoption of interconnected smart appliances."
The survey revealed that Silicon Valley CEOs have plenty of concerns about the current and future health of the region's business climate.
High housing costs were cited by 65 percent of the respondents as the biggest challenge that the region faces. Close behind at No. 2, 63 percent of respondents cited the high costs of recruiting and retaining employees. Next up on the list of worries were business regulations, traffic and business taxes.
"We have to acknowledge our shortcomings," Guardino said. "Housing issues are like Mount Everest in terms of trying to climb them. We have too little land in too small of an area, in a region where a lot of people want to live and work."
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