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For Immediate Release
October 18, 2004


PURCHASING MANAGERS REPORT
HIGHER PRICES FOR GOODS AND SERVICES
Rising fuel, energy, steel and health insurance costs causing the greatest concern

Connecticut purchasing managers say economic conditions in the state are less robust than last quarter but are still solid. They also say they’re paying more for key items, according to the latest survey conducted by the Connecticut Business & Industry Association (CBIA) and the Connecticut Association of Purchasing Management (CAPM).

Eighty percent of respondents expect higher prices for goods and services this quarter compared with 82 percent last quarter and only 50 percent a year ago. Only 4 percent expect lower prices.

Purchasing managers indicate that price increases need to be closely watched. Fuel, energy and insurance costs continue climbing, which could slow further growth and expansion. They also report the rising cost of key raw metal materials, especially steel.

“The number of firms citing high purchase costs for fuel, metals and insurance is still very substantial and with oil prices continuing to rise, it’s no surprise that businesses which depend on fuel or fuel- related products for their operating needs are worried about sustaining economic growth,” says CAPM President Alex Sommers. “High steel costs and uncertain supply will add substantial burdens to construction projects, especially in the public sector.”

The CBIA/CAPM purchasing managers surveys are key indicators of future economic activity. Other key results include:

  • Production levels, that had fallen precipitously by early 2003 improved in 2004. In this survey, they were off 7 percentage points from last quarter, but were still more than 12 percentage points above levels noted at the same time a year ago. Forty-one percent of respondents expect stronger productions levels, 40 percent expect the same level and 19 percent expect lower levels.

  • New orders improved substantially compared with last year, but are behind last quarter’s results. Forty-two percent of respondents expect more orders this quarter, 36 percent expect the same number and 22 percent expect fewer orders this quarter. Last year at this time, only 31 percent expected more orders and 35 percent expected fewer orders.

  • Purchases made by the respondents improved this survey with 56 percent of respondents placing a higher dollar value of orders compared with 53 percent last quarter and only 27 percent a year ago.

  • Jobs still lag production and new orders. Twenty-three percent of respondents expect to increase employment compared with 11 percent a year ago. Fifty-eight percent expect no change in their workforce. In this survey, 20 percent of respondents said they may reduce their workforce compared with 37 percent a year ago.

“Overall, this survey shows solid economic conditions,” says Peter Gioia, CBIA economist. “While job creation still lags production, companies are hiring. Purchasing managers believe the new threat to continued economic growth is the higher cost of principal items purchased by Connecticut companies.”

The survey was conducted by mail and e-mail from Sept. 19 - Oct. 8, 2004. A total of 176 respondents answered the survey for a return rate of 11.7 percent and a margin of error of plus or minus 7.5 percent. Percentages have been rounded and may not total to 100%.

CBIA is the state’s largest business organization, with more than 10,000 members.

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For a copy of the survey, please visit www.cbia.com/newsroom/surveys.

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

350 Church Street · Hartford, CT 06103-1126 ·
Phone: (860) 244-1900 · Fax: (860) 278-8562

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