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Recovery? They're Not Buying
Purchasing managers pessimistic, says state survey
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Business New Haven
3/17/2003
By: BNH
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HARTFORD - After showing signs of a recovery, economic conditions in Connecticut are again deteriorating, according to purchasing managers from across Connecticut.
Those responding to a first-quarter 2003 survey by the Connecticut Business & Industry Association (CBIA) and the Connecticut Association of Purchasing Management have serious doubts that economic conditions will turn around in the near future. The number of respondents with poorer outlooks for their own industries and for the economy in general rose significantly over the previous survey period.
Indeed, more than a third (36 percent) of responding purchasing managers in the first quarter said the outlook for their industries is for worsening conditions, double the 18 percent making that prediction a year ago. Thirty-three percent of respondents said their outlook for the economy in general will worsen, compared to 17 percent expressing that view in the same period of 2002.
Additionally, fully 71 percent of respondents say their companies have reduced their operating budgets due to the economy, with a median reduction of ten percent.
"The respondents' answers indicate that firms are struggling with weak economic conditions," said Peter M. Gioia, CBIA economist. "Signs of recovery have disappeared in these results."
"The worsening performance in new orders reinforces the respondents' anxiety over the year-long performance for their industry and their own company," added John H. Fittz, president of CAPM.
The CBIA/CAPM survey illustrates very challenging conditions for production, orders and employment levels at Connecticut companies. Specifically:
- Production levels, which rose in the second quarter of 2002 and then remained steady, have sunk to early 2002 levels. Only 18 percent of those responding in the first quarter of 2003 see stronger production levels, only three percentage points above a survey-record low of 15 percent in the first quarter of 2001.
- New orders declined significantly from last quarter and are slightly below last year's figures. Only 20 percent of respondents reported more orders this quarter, compared to 27 percent in the fourth quarter of 2002, while 43 percent see fewer orders.
- Inventories of finished goods rose, with 14 percent showing larger inventories and 39 percent smaller inventories this quarter, compared to nine percent showing larger inventories and 40 percent showing smaller ones in the fourth quarter of 2002.
- The soft economy continues to keep new hiring weak. Only nine percent of respondents said their companies had added workers, compared to 13 percent the previous quarter. Meanwhile, 35 percent of first-quarter 2003 respondents said they had trimmed their workforces, compared to 30 percent who said the same in the fourth quarter of 2002.
The survey was conducted by e-mail and snail mail February 3-25. A total of 225 respondents answered the survey for a return rate of 15 percent and a margin of error of plus or minus 6.7 percent.
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