Forecast: Jobs in service should rise

COSTA MESA — The Orange County and state economies should gain a modest amount of jobs in 2011, especially in service industries such as hospitality, education, health care and business services, according to the Chapman University forecast presented Monday.

The slow job growth will continue to be a drag on the housing market, especially for the most expensive homes, forecasters told a large crowd at the Orange County Performing Arts Center.

In total, they expect the Orange County economy to add 23,000 jobs in 2011, growing at a rate of 1.7%. That is slightly better than the California forecast of 1.2% and the U.S. forecast of 1.6%.

During the recession, Orange County was hit disproportionately hard by the sub-prime mortgage meltdown and the housing slump, as many mortgage companies were located here, the forecasters said.

But housing “is showing some life,” even though it has some impediments, said Esmael Adibi, the director of the Anderson Center.

“Are we going to have a fundamental recovery in the housing market?” he asked. “Not until the job market picks up.”

Both California and Orange County started gaining jobs in the third quarter of 2010, the forecasters found, and should continue through next year.

The Orange County service sector is expected to grow by 2.6% in 2011, compared to 0.7% in the manufacturing. Among the strongest industries are forecasted to be professional and business services such as accountants and lawyers, leisure and hospitality, and education.

Many of the companies in those industries are seeing more demand, Adibi said after the presentation, and will have to start hiring again soon.

But Tom Coss, the vice president of business development at Appoint You, a start-up cloud-based appointment service in Aliso Viejo, said sales have not pick up. He said his customers are waiting for a backlog in orders or some other proof of demand.

“It’s not easy for small businesses to take even a moderate risk,” he said. “They just are scared.”

Until hiring picks up and people start buying homes, Orange County’s real estate market will suffer, the forecasters said. The high end of the market is especially vulnerable because people have lost equity in their homes and are unable to move into a bigger house.

“The move-up market is dead,” Adibi said.

While they forecast a 3.3 % appreciation in Orange County home prices during 2011, Adibi was quick to point out that it’s mostly because of the types of homes that will be sold, and the higher-priced homes are likely to lose value.

Nationally, they foresee a similar 3.3% appreciation, a number that is constrained by the many homes in the foreclosure pipeline, Doti said.

This translates to weak national gross domestic product growth today, but in 2011 consumer spending is anticipated to boost the economy, the Chapman economists expect.

Chapman is forecasting a 5.1 % growth in GDP during 2011. Much of that will be led by consumer spending because people have been very frugal during the last two years, the forecasters say, and have reduced their debts.

“There are lots of people who did not but their flat screen TV last December, and they are going to buy it this one,” Adibi said.