A survey of Silicon Valley's chief executives found 14 percent more said their companies added employees in 2005 compared with the previous year, and they're even more optimistic about hiring in the coming year.

The third annual CEO Business Climate Survey was conducted by the Silicon Valley Leadership Group, an organization of local business leaders who advocate on social and business issues. The findings are the latest in a series of small but hopeful signs that the Silicon Valley economy may finally be finding its legs after five difficult years.

The number of CEOs who said their companies added jobs in 2005 in Silicon Valley rose to 55 percent from 41 percent in 2004.

About 74 percent of those hiring in 2005 added between 1 and 100 employees.

The number of companies cutting jobs fell from 24 percent in 2004 to 13 percent last year.

Looking ahead, the number of CEOs who expect hiring to be better in 2006 climbed to 56 percent from 37 percent in 2005.

These rosy numbers are reflected at SpikeSource of Redwood City. Kim Polese, CEO of the open-source infrastructure company, said she added 20 employees in 2005, bringing the company's total in Silicon Valley to 45.

While SpikeSource also has employees in India and Europe, Polese said she expects to continue hiring locally as well as abroad while the 2-year-old company continues to expand.

The upbeat sentiment in the report comes on the heels of two other recent surveys that showed marked increases in both business and consumer confidence in the Silicon Valley economy. In addition, federal job statistics released last month showed that Santa Clara county added jobs in 2005, the first such increase in four years.

Economists are expecting that momentum to continue in the coming year.

Still, the SVLG survey showed that local business leaders are finding plenty to fret about. Last fall, the group released a report indicating that Silicon Valley lags several other U.S. high-tech regions on several measures of quality of life such as education, traffic and housing costs.

When asked to list the top three cost-of-living challenges for families in Silicon Valley, 97 percent ranked housing as No. 1 -- more than double the second item on the list, K-12 education.

CEOs also cited regulations, health care costs and taxes as some of their top business challenges in Silicon Valley.

This is cache, read story here