State firms say lack of capital hinders growth
Connecticut's already poor credit conditions deteriorated between April 1 and June 30, according to the Second Quarter 2012 CBIA/Farmington Bank Credit Availability Survey, surrendering first-quarter gains.
"With economic growth waning, demand for credit has slackened as well. This lies in sharp contrast to what we saw earlier in the year when expectations for expansion were more favorable," said CBIA economist Peter Gioia.
"It was hoped that the prospects for rising profits would boost business lending, thereby further reducing the risk of another downturn in the 2012-13 timeframe, but despite record-low interest rates, credit demand remains rather lackluster."
The survey showed that only 15 percent of respondents saw future credit conditions improving in the near term, while 43 percent thought future credit conditions would remain effectively unchanged. About 41 percent believed near-term credit conditions were likely to deteriorate in the months to come.
"Economic recovery in the middle part of the year has clearly become more tenuous given the slowdown in real GDP growth, modest job gains, and scaled-back plans for expansion within the manufacturing sector," said John Patrick, president and CEO of Farmington Bank.
"Although the slow economy means reduced demand for credit, the good news is that current credit availability readings are up considerably from one year ago and so the basic uptrend in overall credit conditions remains intact for the time being."
Most economists have asserted that credit availability was crucial to sustained economic growth and therefore expected to play a pivotal role in the strength of expansion for the balance of 2012 and into 2013.
"Credit availability is clearly impacted by the overall strength of economic recovery, and with a 1.5-percent growth rate in the second quarter, it would seem that expansion plans for many firms are being postponed," adds Don Klepper-Smith, chief economist and director of research at DataCore Partners.
"The election is creating some degree of economic uncertainty as well, also suggesting a weakening of near-term credit demand."
• More than a quarter of respondents (27 percent) saw credit availability as a problem for their business.
• Of those who saw credit availability as a problem, 27 percent reported that lack of credit adversely impacted their ability to maintain an adequate workforce and/or forced them to reduce their workforce. Sixty-two percent said that they would be unable to grow or expand as a result of inadequate credit, and another 16 percent indicated employee compensation and/or benefits would likely be reduced as a result.
• Asked what types of financing their firms most needed, 31 percent said working capital for day-to-day operations, while another 14 percent said they needed capital for machinery and equipment purchases.
BOSTON — Connecticut single-family home sales increased a mere 0.4 percent in the month of June, according to the latest report by the Warren Group. The modest June gain follows double-digits increases in April and May. Second-quarter single-family home sales totaled 6,723, an 11 percent increase from 6,042 in the second quarter of 2011.
June single-family home sales in Connecticut represented the sixth straight month of increases in 2012. A total of 2,532 single-family homes sold in June, up slightly from 2,521 a year earlier. This marks the best month for sales since June 2010, when there were 3,400 sales.
"While it's positive that sales remained about the same as last year, it looks like the market lost some momentum in June. Connecticut home sales are not as strong as in other parts of New England," said Warren Group CEO Timothy M. Warren Jr. "Hopefully the local consumer confidence combined with low mortgage rates will help the market a great deal."
Year-to-date home sales statewide are up nine percent over 2011.
On July 24 Connecticut achieved a new superlative — highest retail gasoline prices in the continental United States. On that date Constitution State motorists paid an average of $3.82 per gallon, passing even tax-mad California’s $3.79 per gallon.
Connecticut’s gasoline taxes are among the highest in the nation. In addition, the state requires a more expensive, more “environmentally friendly” fuel mix, according to he U.S. Energy Information Agency.
Hawaiian motorists pay the highest prices in the nation, $4.16 per gallon, while South Carolina is the cheapest, at $3.17.
WATERBURY — Jerry Plush, president and chief operating officer of Webster Bank, has been elected chairman of the board of directors of Junior Achievement of Southwest New England. “Jerry is strongly committed to improving the lives of young people,” said Lou Golden, president of JA of Southwest New England, headquartered in Hartford. “During his time on the board he has shown great passion for our mission of empowering young people to own their economic success.”
Plush was named president of Webster Bank, a subsidiary of Waterbury-based Webster Financial Corp., in December 2011 and at the same time was elected a director of the bank. He joined Webster in 2006 following an 11-year career with MBNA America.
City hopes to give Mill River district the business
NEW HAVEN — There’s more to commercial New Haven than downtown, and local political and business leaders gathered July 24 at a once-dilapidated building to demonstrate their commitment to reinvigorating areas beyond the city center.
Their target was the Mill River commercial district where, city officials say, millions of dollars in unrealized revenue can be mined through strategic additions.
The seminal focus of this rebirthing effort is the Powerhouse Building at 458 Grand Avenue. That’s where economic and community development strategists, including Mayor John DeStefano Jr., convened for a press conference to announce its refurbishment. The 112-year-old structure is expected to occupied later this year with dozens of tenants. The plan calls for other parts of the district to be similarly reincarnated as development initiatives advance.
“When we think of jobs and wealth creation in New Haven we tend to think of downtown,” said DeStefano, citing large-scale employers such as Yale University, Yale-New Haven Hospital and the relocating Alexion Pharmaceuticals.
“But we’re also in a place here. This is a district that has some 3,000 jobs,” DeStefano continued. “[W]e see this as a huge asset.”
The Mill River district was historically known for its food products, precision manufacturing and design and construction support businesses, among others.
Soon to be added to that list a colony of professional-medical offices. Building owner Casper Amodio said 42 units will be constructed.
“It’s going to be finished by the end of the fall,” he said.
Already he’s gotten up to 14 requests for space, Amodio added. Two years ago he bought the long-vacant building for just $1. The sale, which was not conducted through the usual public bidding channels, was met with some controversy. Amodio’s supporters stressed his development history. He had successfully revitalized a former Peck Street toy factory (where the popular Erector Set toys were once made) into the bustling, multi-tenant Erector Square complex.
In addition to renovating the building, currently assessed at $212,310, Amodio reportedly agreed to pay for needed environmental clean-up.
The city would like to see the Mill River district thriving with light industry, food and home improvement businesses.
City officials say there are millions of dollars in unmet consumer needs that new companies housed in the district could fill. These include groceries, clothing and shoes, computer hardware, software and supplies, automotive fuels, pet food and supplies, household cleaners, small electric appliances and more.
These findings were among those revealed in a report prepared for the city by Boston-based Utile, a planning and architectural firm, and economic development consultant Ninigret Partners, based in Providence, R.I. They are among participants in a four-part study focusing on Mill River district’s development potential.
As for the Powerhouse Building’s potential, “This will be the nucleus of starting the Fair Haven [Mill River District] project,” said Amodio about the refurbishment.
DeStefano viewed it as reassertion.
“We’re a city,” he said. “We’re not just a downtown.”
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