Are Connecticut businesses optimistic or pessimistic about the outlook for their firms?
The answer is both, according to CBIA's 2017 Third Quarter Economic and Credit Availability Survey.
The survey shows significant increases over the previous quarter in both the percentage of firms reporting an improved outlook and those expecting worsening conditions.
Thirty-seven percent of survey respondents see improved conditions for their firm, up from 29% in the second quarter.
However, 24% predict worsening conditions, a 10-point jump from the last quarterly survey. Forty percent forecast stable conditions, down from 57%.
"We found that several respondent groups are outperforming the norm on growth for their firms over the next three months," CBIA economist Pete Gioia said.
Gioia noted that manufacturers were particularly bullish, with 43% reporting an optimistic outlook against just 20% with a pessimistic forecast.
"This coincides with what we're hearing from manufacturers across the state—overall, they are doing really well," Gioia said.
"They just need to find skilled talent to replace retiring workers."
Over two-thirds (67%) of wholesale trade firms also forecast improved conditions—against 22% who expect a downturn.
In the business and professional services sector, 44% expect unchanged conditions, 38% forecast improvement, and 19% are pessimistic.
And just 10% of construction firms see improving conditions, 30% expect a downturn, and 60% forecast stability.
One-third of small businesses (those with less than 50 employees) see improved conditions, 46% expect stability, and 22% see a downturn.
Mid-size businesses are 46% optimistic, 34% pessimistic, and 19% unchanged, while large companies are evenly split.
Across the state, New Haven County businesses are the most optimistic at 48%, five points better than those expecting worsening conditions.
One third of Hartford County firms predict improved conditions, 54% expect the status quo, and 13% have a bearish outlook.
The survey finds steady, but modest growth for Connecticut businesses.
"The survey finds steady, but modest growth for Connecticut businesses," Gioa said.
Overall hiring trends remain sluggish, with 21% of companies expecting to grow their workforce, down from 23% in the previous quarter.
The percentage of companies expecting to cut their workforce rose five points from the previous quarter to 17%, while 63% see no change, down three points.
Credit availability is not a problem for 88% of survey respondents, up five points from the second quarter.
Seventy-four percent of surveyed firms satisfied their borrowing needs in the last quarter, 20% partially addressed financing requirements, and 6% were unsuccessful.
"Credit availability remains excellent and is expected to slightly improve over the next three months," Gioia said.
"We see more firms access credit and 94% are meeting all or most of their credit needs. These are good signs for expansion."
At 45%, bank loans or lines of credit are the top choice for sourcing financing, followed by vendor credit (9%), credit cards (9%), and business earnings (9%).
Working capital (26%) and machinery and equipment investments (18%) are the top uses for financing.
Trade Sanctions, Weather
Businesses were asked if they would be impacted should sanctions be extended to countries that trade with North Korea.
Although 45% of the respondents conduct international trade, only 6% report that sanctions could have an impact.
Businesses were also asked if the three recent major hurricanes—Harvey, Irma, and Maria—had an impact.
More than half (58%) reported no impact, and the balance of those surveyed cited impacts on customers (24%), supply chain (13%), fuel costs (8%), and other (6%).
The survey was emailed and mailed to business leaders around the state in mid-October to early November. The General Assembly resolved the state's four-month budget deadlock in late October.