Connecticut businesses remain cautious about the state’s economic future, while their hiring expectations declined during the last quarter according to a new survey released today.

The 2016 CBIA/Farmington Bank 3rd Quarter Economic and Credit Availability Survey found 49% of businesses forecast stable conditions, unchanged from the previous two quarters.

Q3 Business OutlookHowever, only 26% expect conditions to improve, dropping from 35% last quarter, and 24% expect their company’s outlook to worsen, up from 17%.

Just 19% expect increases in the size of their workforce, down from 32% last quarter, while 59% expect no changes (53%) and 23% were planning reductions (15%).

“While the probability of a recession is likely low, it’s important to note that more companies are preparing for a reduction in staffing,” said CBIA economist Pete Gioia.

“As the economy struggles to regain jobs, it’s always important to ask why companies are losing them, and right now, we don’t know.”

DataCore Partners’ economist Don Klepper-Smith agreed, noting that the state has lost 14,900 jobs since June and continues to trail the region and much of the country.

“We are clearly seeing starting to see cracks in our economic recovery, but recession is not a foregone conclusion,” he said.

It’s important to note that more companies are preparing for a reduction in staffing.
— CBIA economist Pete Gioia
Klepper-Smith expects the state’s economy to grow at a modest 1%-1.5% in both 2016 and 2017, well below the long-term average annual rate of 2.5%.

The quarterly survey also found:

  • 38% of respondents have used financing over the last three months
  • 78% have used bank loans and lines of credit to meet those credit needs
  • 79% would consider Connecticut’s lending climate to be average, good, or excellent
  • 28% expect the lending climate to worsen over the next three months (up from 18% last quarter)
  • 89% expect no impact from Brexit, while 3% expect a positive impact and 8% anticipate a negative impact

The Farmington Bank Credit Availability Index is a diffusion index that speaks to the health of Connecticut’s credit markets.

This quarter, the FBCAI was 54.7, down from last quarter (66.7).

“As businesses look to grow and invest here in Connecticut, credit conditions remain favorable for them to do so,” said John Patrick, Jr., chairman, president, and CEO of Farmington Bank.