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May 2004 — Vol. 82, No. 4

Purchasing managers survey:

Business improving, but jobs still weak

Production, orders, exports, imports expected to increase

 

Connecticut purchasing managers say business continues to improve for their industries and the economy, reinforcing other indicators that the economic recovery is under way. But job creation will be painfully slow, according to the latest survey by CBIA and the Connecticut Association of Purchasing Management (CAPM). The CBIA/CAPM surveys are key indicators of future economic activity.

Survey respondents said their industries as a whole are doing well, but challenging conditions still exist for about a quarter of the firms surveyed.

“The respondents’ answers indicate that business continues to improve on the local level, but at a slightly less robust pace than in the last survey, mirroring what we’ve seen on the national level,” says CBIA Economist Peter Gioia. “The findings also suggest that the recovery will be strong for some companies, but that companies facing persistent challenges may not be benefiting and will continue to struggle even as the economy continues to improve,” he adds.

The survey also asked about changes in respondents’ export sales and import purchases. Thirty-six percent of respondents who export expect their export sales to improve this year, 53% expect exports to remain the same, and only 10% expect lower exports than last year.

Thirty-two percent of respondents who import expect to import more, 53% expect the same level of imports, and 15% expect to import less this year.

“The outlook for the respondents’ export and import activity is decidedly improved compared with 2003,” says CAPM President Alex Sommers.

Other findings:

  • Production levels, which had fallen precipitously by early 2003, fell 7 percentage points from last quarter, but were 14 percentage points above levels noted at the same time a year ago. Now, 32% of respondents expect stronger production levels, 41% expect the same levels, and 27% anticipate lower levels. In the first quarter 2003 survey, 41% of respondents expected lower production levels.
  • New orders continue to improve and are up substantially compared with a year ago. Forty-two percent of respondents said they expect more orders this quarter, 32% expect the same number of orders, and 26% expect orders to drop. Last year at this time, only 20% of respondents expected more orders and 41% expected fewer orders.
  • The backlog of orders is expected to increase by 23% of respondents — more than last quarter’s 20%. Twenty-eight percent now expect a smaller backlog, down from last quarter.
  • Prices for principle items purchased show no sign of deflation. Sixty-three percent of respondents paid higher prices this quarter, compared with 53% last quarter and 58% a year ago. Only 5% reported lower prices this quarter, the same number as last quarter.
  • Job growth is likely to be painfully slow, though a little better than in the last survey. Fifteen percent of respondents expect to add jobs, compared with 9% a year ago. Twenty-eight percent are considering trimming their workforce; last quarter, less than 25% expected to reduce their workforce. Fifty-seven percent of respondents plan to keep the same number of workers.

    The survey, conducted in February and March, had 159 respondents, for a return rate of 10.6% and a margin of error of plus or minus 7.9%.

 

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