Over 50% of business leaders expect an increase in interest rates by June 2016, according to a new survey released today.
The 2015 CBIA/Farmington Bank 3rd Quarter Economic and Credit Availability Survey found that 40% would see a somewhat negative impact on their firm if the Federal Reserve raises rates either later this year or next.
In addition, business leaders’ outlook for their firms remains relatively optimistic, with most forecasting improvement or stability in the coming months.
Specifically, 34% forecast improvement, the same as last quarter, while 48% percent expect their firm to remain stable, compared to 52% last quarter.
Only 17% expect a decline, up slightly from 13% last quarter.
Of those surveyed, 23% are hiring and 60% plan to remain stable in their workforce. However, 16% anticipate downsizing over the next few months, compared to 10% last quarter.
“The economy is growing, however, the rate has been slow compared to our own long-term growth rate, and when compared to the U.S. average” said Pete Gioia, CBIA vice president and economist.
“Combined with the state’s fiscal situation, it’s clear we’re at a critical turning point and lawmakers need to make decisions that will encourage growth, not hinder it.”
The survey also found 31% have used credit in the last three months to meet their financing needs.
The respondents noted using financing to cover the costs of capital investments (58%), mainly to improve production or sales, trim operational costs, and invest in technology.
Farmington Bank Index Predicts Future Upturn
The survey also notes the Farmington Bank Credit Availability Index (FBCAI). The index is a diffusion index that speaks to the health of Connecticut’s credit markets.
This quarter, the FBCAI showed a clear upturn in current conditions and future expectations with a rating of 61.1, up from 57.4 last quarter.
“As businesses become more confident about their future in Connecticut, banks are ready with credit financing to help them expand, whether it’s through innovative new products or capital investments,” said John Patrick, Jr., CEO and president of Farmington Bank.
Other Key Findings
- 69% of respondents own their firms’ building(s) or real estate
- 83% of respondents report that credit availability is not a problem
- 94% report no changes in lending terms
- 31% consider Connecticut’s lending climate good or excellent, 50% consider it average
- When asked what excites them about doing business in Connecticut, 51% said location
The 2015 CBIA/Farmington Bank 3rd Quarter Economic and Credit Availability Survey was emailed to 1,500 Connecticut business leaders in September and October 2015. A total of 210 responded, for a 14% response rate and a margin of error of +/- 6.9%.
CBIA is Connecticut’s largest business organization, with thousands of member companies, small and large, representing a diverse range of industries from every part of the state. For more information, please email or call Meaghan MacDonald (860.244.1957).