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Sept. 18, 2003

CONNECTICUT BUSINESSES SAY ECONOMIC
CONDITIONS ARE SLOWLY IMPROVING
BUT EMPLOYMENT LEVELS ARE STILL DECLINING


Connecticut purchasing managers see continued improvement for their industries and for the economy according to the latest quarterly survey (third quarter of 2003) conducted by the Connecticut Business & Industry Association (CBIA) and the Connecticut Association of Purchasing Management (CAPM).

The survey results indicate that the recovery is underway, but is painfully slow. Challenging conditions exist for production, orders, and especially in employment levels at area firms, but some improvement has been noted in almost every factor measured by the survey compared with the survey of six months ago.

In fact, 50% the respondents said the outlook for next year’s economy is for better conditions, compared to 45% making that prediction in the last survey (second quarter of 2003). A smaller percentage of respondents said their outlook for the economy in general would stay the same or worsen, compared to those expressing that view in the second quarter of 2003.

“Businesses are still facing challenges, but are now seeing signs of recovery,” said CBIA economist Peter Gioia. "More managers report conditions that are improving and stabilizing for their firms, but few are expecting any significant improvement in hiring, and in fact more companies may be forced to cut their workforces.”

The survey examines the experiences of business executives in relationship to the economy and to their particular industry. “The outlook each has for his or her own industry is substantially more positive than in early 2003, but there is a fear of increased foreign competition and higher energy costs,” says CAPM President, Alex Sommers.

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

  • The soft economy continues to wreak havoc with job growth. Respondents’ say that only 11% will increase employment compared to 18% a year ago. Over 37% may trim their workforces. Last quarter less than 29% expected to reduce the number of workers. 52% will keep the same number of workers.
  • Production levels, which had fallen precipitously early in the year, rose 1 percentage point from last quarter, but 11 percentage points from two quarters ago. 29% reported stronger production levels, 41% observed the same level and 30% saw lower levels in this survey. In the first quarter survey 41% reported lower production levels.
  • New orders stayed flat compared to last survey but are substantially improved compared to two quarters ago. 30% expect more orders this quarter, 34% anticipate the same number of orders and 35% report fewer orders this survey. Last year at this time, 28% of respondents expected more orders and 42% expected fewer orders.
  • Backlog of orders decreased somewhat with 13% showing a larger backlog compared to 17% last quarter. 38% showed a smaller backlog, the same as last quarter.
  • Respondents see no signs of deflation in prices. Prices paid for principle items continued to see increases or stability, not falling prices. 50% of respondents reported higher prices this quarter compared to 56% last quarter and 58% two quarters ago. Only 5% reported lower prices compared to 8% last quarter and 6% two quarters ago.

The survey was conducted by e-mail and by mail from August 25th through September 12th, 2003. A total of 183 respondents answered the survey for a return rate of 12.2% and a margin of error of plus or minus 7.39%.

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).

 

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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