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May 29, 2003

PURCHASING MANAGERS NOW SEE UPTURN IN CONNECTICUT ECONOMIC CONDITIONS

CBIA/CAPM survey respondents do not see signs of deflation

Purchasing managers in the state see an emerging recovery of the state’s economy.

     Respondents to the latest quarterly survey (second quarter of 2003) conducted by the Connecticut Business & Industry Association and Connecticut Association of Purchasing Management report a reverse of the previous quarter’s significant slide in economic performance as well as in the performance of their own firms and industries.

     While saying that challenging conditions still exist for orders, production and employment levels, those responding note some improvement in almost every factor measured by the survey.

     “These survey results are significantly better than the figures for early 2003. Several key indicators look better than last quarter’s results, and some are better than results we’ve seen over the past four quarters,” said Peter M. Gioia, economist, CBIA. “The respondents’ answers indicate that confidence and conditions have improved post Iraq, though we still have a way to go for a solid recovery.”

     “The improved performance in new orders and orders placed by the respondents are very encouraging in light of performance over the past several surveys,” said John H. Fittz, president of CAPM.

     The CBIA/CAPM purchasing managers’ surveys are key indicators of future economic activity.

     Several key results from the survey:

  • Production levels, which had fallen precipitously in the first quarter of 2003, rose 10 percentage points in the second quarter, with 28 percent of those responding expecting stronger production levels in the second quarter, compared to 18 percent in the first quarter.

  • New orders rose significantly and are slightly below last year’s figures, with 30 percent of those responding expecting more orders in the second quarter compared to 20 percent in the first quarter. Thirty-seven percent are seeing the same number of orders and 32 percent are seeing fewer orders this quarter. Last year at this time, 37 percent of respondents expected more orders and 36 percent expected fewer orders.

  • The backlog of orders increased somewhat, with 17 percent of those responding reporting larger backlogs in the second quarter, compared to 12 percent in the first quarter, while 38 percent showed a smaller backlog in the second quarter, compared to 48 percent in the first quarter.

  • Respondents do not see signs of deflation. Prices paid for principal items continued to remain stable or increase, with 56 percent of respondents reporting higher prices in the second quarter, compared to 58 percent in the first quarter and 57 percent in the fourth quarter of 2002, while only 8 percent reported lower prices, compared to 6 percent last quarter and 10 percent two quarters ago.

      The soft economy continues to limit new hiring, although it was slightly improved in the second quarter. Twelve percent of second-quarter respondents said their companies will increase employment, compared to 9 percent in the first quarter, but almost 29 percent of second-quarter respondents said their companies may trim their workforces. In the first quarter more than 35 percent expected their firms to reduce the number of workers. Fifty-nine percent of second-quarter respondents said their firms will keep the same number of workers.

     The survey was conducted by e-mail and by mail from May 1 through May 23. A total of 212 respondents answered the survey for a return rate of 14.1 percent and a margin of error of plus or minus 6.87 percent.

     CBIA is Connecticut’s largest business organization, with over 10,000 members. CBIA’s mission is to create a competitive business climate that leads to economic growth and job creation.

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

 

Media wishing to attend the event should contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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