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For Immediate Release
Dec. 16, 2003

PURCHASING MANAGERS CONFIDENT IN THE 2004 ECONOMY

Connecticut purchasing managers are confident the economy will strengthen in 2004, according to the latest survey conducted by the Connecticut Business & Industry Association (CBIA) and the Connecticut Association of Purchasing Management (CAPM).

     Purchasing managers said they are continuing to see significant improvements in the economic and business conditions of their industry and are very upbeat about the outlook for 2004. The survey results indicate that the recovery is well under way but is painfully slow. Challenging conditions still exist for employment growth, but improvement has been noted in almost every other factor measured by the survey compared with results from nine months ago.

     Fifty-seven percent of the respondents said they expect better economic conditions next year, compared with 50 percent making that prediction in the last survey (third quarter of 2003). Only 12 percent of respondents said their outlook for the economy in general was worse, compared with 25 percent expressing that view last quarter.

     “The results of this survey indicate that business has seen a surge of activity lately on the local level, especially in capital spending - purchases of equipment, computers and machinery - complementing what we have seen on the national level,” said CBIA Economist Peter Gioia. “Connecticut companies are benefiting from the significant improvements in the U.S. gross domestic product and the nationwide manufacturing gains citied in recent economic reports.”

     “The survey shows positive advances in the experiences of purchasing managers in relationship to the economy and to their particular industry, especially in the area of manufacturing, which has been struggling but is finally seeing improvement,” said CAPM President Alex Sommers.

     The CBIA/CAPM purchasing managers’ surveys are key indicators of future economic activity. Other key factors from the survey include:

  • Production levels, which had fallen precipitously earlier in the year, rose 9 percentage points from last quarter and 21 percentage points from three quarters ago. Thirty-nine percent of respondents expect stronger production levels next year, 44 percent believe levels will remain the same and 18 percent expect lower levels. In the first-quarter 2003 survey, 41 percent expected lower production levels.
  • New orders have continued to improve every quarter, rising 10 points in this survey over third-quarter figures. Thirty-nine percent of purchasing managers responding to the survey expect more orders this quarter, 38 percent expect the same number of orders and 22 percent anticipate fewer orders. Last year at this time, 27 percent of respondents expected more orders and 37 percent expected fewer orders.
  • The backlog of orders increased somewhat, with 20 percent or respondents expecting a larger backlog compared to13 percent last quarter. Twenty-nine percent said they expect a smaller backlog, down from last quarter.
  • Respondents see no signs of deflation in prices. Prices paid for principle items are expected to increase or stabilize, not fall. Fifty-three percent of respondents reported higher prices this quarter, compared with 50 percent last quarter and 56 percent two quarters ago. Only 5 percent reported lower prices, the same as last quarter.
  • Jobs still lag, though somewhat less so than earlier this year. Ten percent of respondents said they will increase employment compared with 9 percent at the beginning of the year, and 65 percent plan to keep the same number of workers. Twenty-five percent of purchasing managers responding to the survey said they expect to trim their workforce. That’s down from 37 percent last quarter.

     The survey was conducted by e-mail and by mail from Nov. 10 through Dec. 3, 2003. A total of 175 respondents answered the survey for a return rate of 11.7 percent and a margin of error of plus or minus 7.6 percent.

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     CBIA is Connecticut’s largest business organization, with over 10,000 members.

     CAPM is the Connecticut Chapter of the Institute for Supply Management (formerly the National Association of Purchasing Management).

      To arrange an interview with Pete Gioia, CBIA’s economist, or for a copy of the survey, please call Nancy Andrews, media relations manager, at 860-244-1957, or e-mail her at andrewsn@cbia.com.