Incorporations for 3rd Quarter Soar
New business incorporations in California in the third quarter reached the highest level this decade for the three-month period, a research firm reported Wednesday.
The figures also show that the state’s economic rebound is spreading from major metropolitan areas to outlying regions.
A total of 12,471 new businesses were incorporated statewide last quarter, up 6.4% from a year earlier, said research firm CDB Infotek in Santa Ana, which tracks corporations registered with the secretary of state.
The pace of new-business formation has accelerated since incorporations hit a low point in 1991. So far this year, a total of 40,826 new corporations registered through September, the most for the first nine months of any year since 1989.
Third-quarter incorporations actually were down 7.1% from those in the second quarter. But John Karevoll, a CDB analyst, said the quarterly decrease reflects a typical seasonal pattern.
Orange County had 1,415 new incorporations, 3.3% more than in the third quarter of 1996.
Incorporations are viewed as a leading indicator of economic activity, presaging productivity gains.
“It’s an indication that businesses are growing,” said Ted Gibson, chief economist at the state Department of Finance.
“People see that sales are doing well and there is a place for new businesses in the marketplace,” he said.
Karevoll said the figures demonstrate that the strong growth in new-business formation seen in Orange County and Silicon Valley the last few years is now reaching regions such as the Inland Empire. “The increase we’ve seen in high-tech centers has migrated out to other areas,” he said.
Incorporations in all of Southern California, including San Diego, grew 6.1% to 8,317 in the third quarter, CDB said.
In Los Angeles County, 5,054 firms incorporated in the third quarter, up 2% from a year earlier.
The Riverside-San Bernardino region, where incorporations had been declining, saw filings jump 17.7%, to 612 in the quarter.
In the San Francisco Bay Area, where incorporations began increasing at a rapid pace four years ago, the growth slowed last quarter. Incorporations in the region rose 1.5% from a year earlier, to 2,671. In Santa Clara County, home to Silicon Valley, the number was up just 1%, to 778.
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More Business Coming
New business incorporations--often viewed as a harbinger of new jobs and economic activity--increased statewide and in Southern California in the third quarter, compared to the same period a year ago:
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Orange Los Angeles Riverside/ Statewide County County San Bernardino 1996 11,716 1,370 4,953 520 1997 12,471 1,415 5,054 612 % Increase 6.4% 3.3% 2.0% 17.7%
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Setting a New Pace
This year’s statewide increase for the first nine months is the highest during this decade. New business incorporations, January through September:
1990: 34,098
1991: 31,905
1992: 32,846
1993: 35,065
1994: 37,397
1995: 36,541
1996: 38,327
1997: 40,826
Source: CDB Infotek
