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Connecticut Credit Conditions Improve in First Quarter 2012

May 22, 2012 By raymonda

Credit Availability Survey Shows Best Overall Results Since Fourth Quarter 2010

Connecticut’s credit conditions are showing signs of improvement according to the First Quarter 2012 CBIA/Farmington Bank Credit Availability Survey, with the credit availability index rising more than five index points to 28.5, the best number since fourth quarter of 2010 when the index was at 31.5.

“The national economic recovery is three years old as of mid-2012,” says John Patrick, president and CEO of Farmington Bank. “Going forward, credit availability will assist area businesses with the funding of day-to-day operations, payroll obligations, capital investments, maintaining sufficient levels of inventories, and future plans for expansion.”

Economists have long argued that credit availability is crucial to sustained economic growth and therefore is expected to play a pivotal role in the strength of expansion going forward for the balance of 2012 and into 2013.

“Economic recovery so far has lagged prior expansions,” says Peter Gioia, economist for CBIA. “We still have challenges regarding job growth despite the fact that state and regional unemployment rates are declining.

“The new data reflects a consensus view that credit conditions are ‘improving modestly’ for many area businesses but have yet to recover to a point that could be deemed ‘strongly positive in the aggregate.’”

Don Klepper-Smith, chief economist and director of research at DataCorePartners, adds that, “Credit availability is crucial to the strength of economic recovery. Ample credit means sufficient staffing for many area firms, adequate inventories on-hand for future sales, and needed capital for future expansion.

“Heading into the second half of 2012, we see we’re on a path of continued economic growth. Sustaining momentum will be important to economic recovery heading into 2013, when the primary risks to recovery may be a bit more pronounced. Overall, I’m encouraged.”

The first quarter 2012 survey showed that 41% of all businesses polled expect the outlook for their individual firms to improve over the next three months, while 34% anticipate better economic performance nationally over the next quarter.

Other findings:

  • Fourteen percent of respondents saw future credit conditions improving over the near-term, while 52% thought that future credit conditions would remain effectively unchanged. About one-third of respondents (34%) were of the opinion that near-term credit conditions are likely to deteriorate in coming months.
  • Fifteen percent of respondents rated current conditions as either “good” or “excellent,” while 47% rated current credit conditions as being “average.” About 38% stated that correct credit conditions were either “poor” or “fair.”
  • When asked about types of financing their firms needed most, about one-third (30%) of respondents stated they needed working capital for day-to-day operations, while another 11% said that the capital was needed for machinery and equipment purchases.
  • Forty-two percent of respondents stated they would use available credit by investing in new equipment, while another 19% sated they would use the credit to expand into new stores, branches, and operations. About 14% of respondents said they would use the funds to maintain their current workforce, and 25% reported that they would be adding workers if funds were available.
  • Seventy-six percent of respondents stated that credit availability had not been problematic for their businesses, while just 24% stated that credit availability was a problem.

“This is an improved credit outlook by Connecticut CEO’s, and we expect to see their ability in maintaining margins over the next year to result in more hiring,” says Marie O’Brien, President of the Connecticut Development Authority.

The First Quarter 2012 CBIA/ Farmington Bank Credit Availability Survey was emailed to 1,965 Connecticut businesses in April of 2012. A total of 12.5% executives responded, for a margin of error of 95% confidence at
+/-6.3%.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie C. Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: News Releases, Surveys Tagged With: , , , ,

Commercial & Industrial Real Estate Professionals Hopeful

March 9, 2012 By buddj

Current Conditions Still Weak, but Survey Results Show Potential for Future Improvement

Conditions in the commercial and real estate markets reflect what we see in general economic and credit surveys, according to the 1st Quarter 2012 Commercial and Industrial Real Estate Survey released today.

The survey, sponsored by Farmington Bank and O’Conner Davies Munns & Dobbins and conducted by CBIA, The Connecticut Economic Research Center (CERC), and DataCore Partners LLC, found that while current conditions are weak, future trends are up from past surveys.

Key findings:

  • Most respondents (53%) rated overall current market conditions in Connecticut as fair, while  more than a third (38%) described them as poor. Only 9% said conditions are good, and no respondents characterized current conditions as excellent. When asked to predict overall market conditions statewide over the next three months, responses reflected a slightly more positive outlook, with 52% of respondents expecting fair conditions, 33% poor, and 15% good.
  •  Just over half (52%) of respondents described market conditions in the retail sector as fair, while 27% rated them as poor. Nearly a quarter of respondents (21%) characterized retail-sector conditions as good, and 1% called them excellent. Respondents’ outlook for market conditions in the retail sector over the next three months was somewhat more positive, with 55% expecting fair conditions, 23% poor, and 22% good.
  • The office sector did not fare as well, with nearly half (49%) of those surveyed rating conditions as fair and 40% as poor. Eleven percent ranked conditions as good, with 1% describing them as excellent. Looking out three months, respondents were slightly more positive: 47% anticipate fair conditions, 37% poor, and 16% good. No respondents, however, foresee excellent conditions in the office sector over the next three months.
  • The investment sector saw the strongest numbers overall, with 45% of respondents describing conditions in that sector as fair and 30% as good. Only 23% saw conditions as poor, and 2% characterized them as excellent. Looking out three months, 53% foresee fair conditions, 27% good, 18% poor, and 2% excellent.

Results from the survey are being presented by CBIA economist Peter Gioia today at the Fairfield and Westchester County Commercial and Industrial Real Estate Outlook at the Sheraton Stamford Hotel. 

The survey was conducted in February 2012, with 105 respondents and a margin of error +/-9.7%. The sample comprised a mix of commercial and industrial real estate professionals, 62% of whom were brokers.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie C. Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: News Releases, Surveys

Commercial and Industrial Real Estate Experts Offer Annual Outlook

March 1, 2012 By buddj

Speakers to Provide Insight and Opportunities

Noted real estate economist Kenneth McCarthy, senior economist and senior managing director of research for Cushman & Wakefield Inc., will be the keynote speaker at the Annual Fairfield and Westchester County Commercial and Industrial Real Estate Outlook on March 9, 2012, at the Sheraton Stamford Hotel in Stamford.

CBIA economist Peter Gioia will continue the discussions with the presentation of the latest Commercial and Industrial Real Estate Survey.

Following the outlook presentations, Rachel Gretencord, director of real estate for the Connecticut Economic Resource Center (CERC) will give a CERC Sitefinder® Update on commercial and industrial real estate properties currently available.

The event will include a well-known panel of local commercial real estate brokers, consisting of Jim Fagan, senior managing director at Cushman & Wakefield of Connecticut, Inc.; Jeff Ryer, SIOR, CCCIM, chairman & CEO of Ryer Associates – Danbury; and Glenn Walsh, senior director, Transaction Services Group, White Plains, New York, Office, of Cushman & Wakefield; and moderated by Steven F. Kirn, partner at McGladrey.

The Annual Fairfield and Westchester County Commercial and Industrial Real Estate Outlook is sponsored by McGladrey & CL&P/ Yankee Gas and is brought to you by CBIA, CERC, and the Stamford Chamber of Commerce.

Full Schedule of Events:                                         

  • 8:30 – 8:45 am – Introduction by Peter Gioia, vice president and economist, CBIA
  • 8:45 – 9:30 am – Keynote speaker Kenneth McCarthy, senior economist, senior managing director, research, Cushman & Wakefield Inc.
  • Commercial and Industrial Real Estate Survey Presentation by Peter Gioia, vice president and economist, CBIA
  • 9:30 – 9:45 am – Commercial and Industrial Real Estate Survey Presentation by Peter Gioia, vice president and economist, CBIA
  • 9:45 – 10:00 am – Break
  • 10:00 – 10:15 am – CERC Sitefinder® Update by Rachel Gretencord, director of real estate, CERC
  • 10:15 – 11:30 am - Commercial Real Estate Brokers Panel:  Moderator: Steven F. Kirn, partner, McGladrey, Jim Fagan, senior marketing director, Cushman & Wakefield of Connecticut, Inc., Jeff Ryer, SIAO, CCIM, chairman & CEO, Ryer Associates – Danbury, and Glenn Walsh, senior director, Transaction Services Group, White Plains, New York Office, Cushman & Wakefield
  • 11:30 am Adjournment.

The event is free for all attendees.

Media wishing to attend the event should contact Ann Marie Raymond (860.244.1957; annmarie.raymond@cbia.com).

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie C. Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: News Releases, Surveys, What's New

Credit Conditions Show Signs of Improvement in 4Q2011; Still Low Based on Historical Statistics

February 20, 2012 By buddj

CBIA/Farmington Bank Survey Finds Possible Boost for Business Lending

Connecticut’s credit conditions are showing signs of improvement according to the Fourth-Quarter 2011 CBIA/Farmington Bank Credit Availability Survey, with the credit availability index rising more than five index points to 22.9.

With economic activity improving, many economists now believe the prospects for rising profits may boost business lending at a critical time in the business cycle, thereby further reducing the risk of recession in 2012.

“Achieving an actual step up in economic growth in Connecticut requires more favorable credit conditions, with ample credit being made available for both consumers and businesses,” says John Patrick, president and CEO of Farmington Bank.

“To the degree that Connecticut businesses can gain timely access to credit, they will be able to increase inventories, hire new employees, modernize facilities, and finance day-to-day operations.”

According to state economists, better credit conditions are extremely important in promoting overall economic recovery for many small and midsize businesses.

“In 2011, Connecticut showed encouraging economic signs,” says CBIA economist Peter Gioia. “Unemployment was down; spending power, business confidence, and holiday spending were up; and interest rates were at record lows.

“As a result, many of Connecticut’s small businesses are beginning to show more optimism about near-term business projects.”

Don Klepper-Smith, chief economist and director of research at DataCore Partners, adds, “The current data on overall credit conditions is encouraging and adds to a body of evidence pointing to a stronger economy. Having access to timely credit in ample amounts will surely help us build on this rising tide of economic momentum and hopefully increase business confidence statewide.”

The fourth-quarter 2011 survey showed that 46% of all businesses polled now expect the outlook for their individual firms to improve in 2012, while 37% anticipate better economic performance nationally over the next three months.

Other key findings:

  • Only 23% of respondents expect conditions to improve over the next three months.
  • 33% anticipated some degree of improvement within the next three months in their own industry, while only 18% expected industry conditions to weaken.
  • More than one-third (36%) of respondents replied that they used financing within the past three months to meet capital needs, and 64% said they had not sought financing.
  • One-third of respondents stated the financing needed most by their firms was for working capital for day-to-day operations, while another 15% cited machinery and equipment purchases.
  • 48% stated that if available, credit would be used for new plants and equipment; 19% would use it for expansion into new stores, branches, and operations; 17% said they would use credit to maintain current workforce; and 24% said they would add new hires.
  • More than one-third (36%) of respondents stated that inability to secure adequate credit would mean they would be unable to finance increased sales. Well over half (60%) stated they would be unable to grow or expand their businesses.

“The state of Connecticut’s economy is slowly showing signs of improvement,” says Marie O’Brien, president of the Connecticut Development Authority (CDA).

“In order to continue that trend, it is imperative that Connecticut companies have access to timely credit availability, which is critical for job growth and business expansion.”

The Fourth-Quarter 2011 CBIA/Farmington Bank Credit Availability Survey was emailed to 1950 Connecticut businesses in early January 2012. A total of 211 executives responded, for a margin of error at 95% confidence at +/- 6.7%.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie C. Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: In the News, News Releases, Surveys

Connecticut’s Economy Shows Progress; Too Early to Lose Caution

February 13, 2012 By buddj

While Job Numbers and Business Confidence Begin to Rise, Housing Market and Budget Issues Cause Concern

Connecticut’s economy is showing signs of improvement according to a new survey of businesses in the state, but issues at the international and national levels remain concerns.

The Connecticut Business & Industry’s Fourth Quarter 2011 Economic Survey found that businesses were more optimistic in the fourth quarter than they were in the third quarter of last year.

“The fourth quarter survey was a welcome change to the results of our third quarter report,” says CBIA economist Pete Gioia. “While too early to determine a trend, the survey shows optimism for growth on par with a steady economic recovery.”

The survey shows 46% of respondents see their own firm improving over the next three months, with only 14% expecting a worsening. In the third quarter survey, only 29% of respondents saw the potential of improvement and 28% instead saw the potential that their firm would worsen.

The survey also saw executives expecting more growth nationally first, then locally. Thirty-seven percent of respondents expect the US economy to improve, while 19% expect further worsening. Although still better than last quarter, expectations at the state level are weaker. Twenty-three percent of respondents see the state economy improving while 34% expect continued deterioration.

“While this survey shows business leaders are beginning to gain confidence, there are challenges to be met going forward. That’s why it’s important for our policymakers to continue to lean the cost of state government, reform public education, reduce and address barriers to economic growth, and modernize state infrastructure,” Gioia says.

Fourth quarter economic survey key performance indicators:

  • 47% expected increased production and sales for the next quarter, up from 35% in the third quarter
  • 46% of respondents see future gains in productivity and wages
  • 23% expect to add workers and 13% expect to decrease workers over the next quarter, compared to only 16 percent saying they expected to add last quarter and 22% who expected to cut jobs.

CBIA’s fourth quarter 2011 economic survey was emailed to 1,950 Connecticut businesses in early January, 2012. A total of 216 executives responded, with an 11% response rate and margin of error of
+/-6.8 percent.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie C. Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: News Releases, Surveys, What's New

National, Global Issues Impact Connecticut Economy

November 28, 2011 By buddj

Amid Congressional Gridlock, European Debt Crisis, Businesses See Some Positive Economic Signs

Connecticut’s economic recovery remains sluggish according to a new survey, as national and global issues continue to impact productivity and sales forecasts.

The Connecticut Business & Industry’s third quarter 2011 economic survey found that while businesses remain cautious, some positive trends emerged.

“This has been a rough year,” said CBIA economist Peter Gioia, “Companies are watching what’s happening in Washington and in Europe and they are concerned about the long road ahead.”

After seeing a steep drop in economic expectations in the second quarter of 2011, CBIA’s latest quarterly survey showed a slight increase in positive expectations for future quarters.

Almost half (48 percent) of respondents felt the state economy would remain stable or improve, compared with just 27 percent in the second quarter. Just nine percent forecast a significant worsening, down from 19 percent the previous quarter.

Confidence in the national economy remains flat, with 10 percent of respondents expecting some improvement (against 11 percent last quarter) and 43 percent say it will remain stable (41 percent).

However, 47 percent expect the national situation to worsen, flat with the second quarter, while reflecting a more pessimistic mood than the third quarter of 2010, when 28 percent expected a decline and 24 percent forecast improvement.

As for industry outlook, 23 percent of those surveyed expected that conditions will improve within their own sector, compared with 19 percent in the second quarter.

Gioia said the survey was completed prior to the October special session of the General Assembly and passage of the bipartisan jobs bill.

“Any sense of optimism in the survey results could be linked to expectations about the pending special session,” Gioia said. “And the jobs bill featured a number of important initiatives and programs which now could have a big impact on the state’s economy.”

Gioia also noted that while the state’s October jobs report showed a second consecutive month of job growth, the Connecticut Department of Labor believed many of those jobs were temporary, attributing them to restoration efforts following tropical Storm Irene.

“While there is good news in the report of additional jobs being created in October, it should be remembered that for year-over-year, we’ve only added 10,100 jobs in total,” Gioia said.  “We still have an awful long way to go to fully erase the jobs losses from the recession.”

Third quarter economic survey key performance indicators:

  • 35 percent expected increased production and sales for the next quarter, consistent with second quarter findings.
  • The percentage of respondents expecting increased productivity fell seven percent  to 29 percent in the third quarter.
  • 17 percent expected productivity to decrease in future quarters, up from 11 percent in the previous quarter.

CBIA’s third quarter 2011 economic survey was emailed to 2,000 Connecticut businesses in September, 2011. A total of 235 executives responded, for a 12 percent response rate and a margin of error of +/-6.2 percent.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: News Releases, Surveys, What's New

While Credit Conditions Improve, Connecticut’s Economy Remains Stalled

November 14, 2011 By buddj

CBIA/Farmington Bank Credit Survey Finds Third Quarter Improvement in Credit Availability Offset by Declining Consumer Confidence

Connecticut’s credit conditions showed a mild rebound according to the third-quarter 2011 CBIA/ Farmington Bank Credit Survey, with the credit availability index rising more than three points to a 16.8 level.

While that reverses modest declines through the first six months of 2011, credit conditions remain below the level for the third quarter last year.

“To the degree that Connecticut businesses can gain timely access to credit, they will be able to increase inventories, hire new employees, modernize facilities, and finance day to day operations,” said John Patrick, president and CEO of Farmington Bank.

Economists believe the modest improvement in credit availability was offset by falling consumer confidence, signaling a continued lack of economic growth.

“Higher energy prices have siphoned off consumer spending power at a critical time,” said Connecticut Business & Industry Association economist Peter Gioia. “Consumers are postponing purchases of services and goods, adversely impacting cash flows in the small business sector.”

Gioia added that the decline in revenue for many of Connecticut’s small businesses could cause area lenders to take a more risk-averse lending strategy, further stalling growth.

Don Klepper-Smith, chief economist and director of research at New Haven-based DataCore Partners, said that while he was encouraged by the third quarter credit findings, widespread uncertainty continued to undermine state and national economic recovery.

“I can’t recall an economic recovery where there was so much underlying uncertainty, and that is clearly problematic,” he said. ”Many businesses have postponed new hiring and are taking a wait and see approach to the current cycle.” 

Less than half of survey respondents (47%) expect that near-term credit conditions would deteriorate in the coming months. Only 10% saw conditions improving, while 42% thought availability would stay unchanged.

Other key survey findings:

  • More than half of respondents (62%) said they would be unable to grow or expand their business as a result of not being able to secure adequate credit.
  • About 29% said they planned to trim their workforce, while about a quarter said they expected to reduce compensation and/ or benefits. 
  • About 32% of respondents used financing in the last three months, which is the same percentage reported in the third quarter survey.
  • About 40% of respondents said that if credit was available they would be investing in new equipment.  Another 18% said they would use the funds to expand into new stores, branches or operations.
  • 17% said they would be hiring new employees if funds were made available.

“The national economic recovery is well into its third year and is still struggling,” said Marie O’Brien, president of the Connecticut Development Authority (CDA). “For Connecticut companies that means credit availability and timeliness is crucial for job growth and business expansion.”

The Third Quarter 2011 CBIA/Farmington Bank Credit Availability Survey was emailed to 2,000 Connecticut businesses in September of 2011.  A total of 235 executives responded, for an 11.75% response rate and a margin of error of +/-6.2%.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Ann Marie Raymond (860.244.1957; annmarie.raymond@cbia.com) or visit cbia.com/newsroom.

Filed Under: News Releases, Surveys, What's New

Connecticut’s Economic Recovery Slows as Business Confidence Weakens

September 8, 2011 By buddj

Survey Highlights Critical Importance of Special General Assembly Session on Jobs

The early, steady pace of Connecticut’s economic recovery slowed significantly this year amid concerns about the national economy, state tax increases and consumer uncertainty, according to the results of a survey released today.

The 2011 Survey of Connecticut Businesses, published by the Connecticut Business & Industry Association and the accounting, tax and consulting firm BlumShapiro, found that while hiring and profits are up, concerns about the state’s competitiveness are growing.

The annual survey, released today at The Connecticut Economy conference in Rocky Hill, takes the pulse of Connecticut’s business community, identifying issues and trends within the state’s economic, fiscal, and regulatory climates.

Since 2010, the state showed mixed progress in recovering from the recession. However, steady gains through the first quarter of 2011 eroded significantly by the third quarter of the year.

CBIA president and CEO John R. Rathgeber stressed the importance of business and government leaders working together to develop solutions. He noted that while the economy continued to struggle, Connecticut’s solid economic base had great potential for creating and retaining jobs in the state.

“We’re very pleased and encouraged that the Governor is calling lawmakers into session to address the creation and retention of jobs in Connecticut,” Rathgeber said.

“It is crucial that policymakers now forge a better relationship with the state’s business community and advance policies that inspire business confidence, strengthen our economic base, and attract new investment.”

Rathgeber’s comments were echoed by BlumShapiro partner Janet M. Prisloe, who pointed out that profit reports from the manufacturing and distribution sector, vital to the state’s economic success, were an encouraging sign.

“Our legislators need to provide the proper incentives to business leaders so that they invest and grow their businesses in Connecticut versus other states,” she said.

While the 2011 survey revealed continued improvement in business performance, it uncovered a serious lack of confidence among businesses, with only 27% of those surveyed rating current conditions as excellent or good.

 “The good news is that Connecticut businesses have been able to generate sustained profits while maintaining healthy levels of productivity over the last year,” said Don Klepper-Smith, chief economist at DataCore Partners.

“The bad news is that business confidence faces an uphill battle brought on by political infighting in Washington, higher state and local taxes, and growing consumer uncertainty.”

More than half of those surveyed said reducing the size of state government and making it more efficient was the single greatest action policymakers could take to spur long-term economic growth.

Incentives for business startups, growth, and relocation and transportation infrastructure improvements also were cited as priorities.

Other suggestions included lifting the regulatory burden on business, expanding and improving vocational training, providing tax credits for new hires, reducing healthcare costs, and improving access to financing.

The 2011 Survey of Connecticut Businesses was emailed to 5,027 businesses in late July 2011. There were 707 responses, for a return rate of 14 percent and a margin of error of plus or minus 3.75 percent.

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CBIA is Connecticut’s largest business organization, with 10,000 member companies. For more information, please contact Joe Budd (860.244.1951; joe.budd@cbia.com) or visit cbia.com/newsroom.

BlumShapiro is the largest regional accounting, tax, and business consulting firm based in New England, with offices in West Hartford and Shelton, CT, and Rockland, MA. For more information about BlumShapiro, visit blumshapiro.com.

Filed Under: CBIA Home page, News Releases, Surveys, What's New

Debt Crisis, Stalled Economy Causing Concern for Connecticut Businesses

July 28, 2011 By raymonda

CBIA economic survey shows slowdown in production and sales

The deadlock over the national debt in Washington, a stalled economy, and an unemployment rate above 9 percent are causing big concerns for Connecticut businesses, according to the Connecticut Business & Industry Association’s second-quarter 2011 economic survey released today.

Connecticut and the nation are facing a jobs crisis. In the last two months alone, Connecticut lost nearly 10,000 jobs and production indicators have weakened.

What’s more, Connecticut employers are adjusting to new withholding requirements for personal income taxes, and coping with additional assessments on unemployment taxes.

“The downturn is being largely driven by national factors that we hope will be resolved in the coming weeks,” says CBIA Vice President and Economist Peter Gioia. “Connecticut’s economy had been showing slow but modest growth coming out of the recession. We hope this report is just a short-term dip and that our economy will bounce back and businesses will report improvements in the next quarter survey.” [Read more...]

Filed Under: News Releases, Surveys, What's New Tagged With: , ,

Credit Conditions Worsen Amid Rising Economic Uncertainty

July 21, 2011 By raymonda

CBIA/Farmington Bank Credit Survey records some of the lowest numbers in more than a year

Businesses are facing greater economic uncertainty at the national and state levels, leading to the second consecutive decline in Connecticut’s credit conditions, according to the second-quarter 2011 CBIA/Farmington Bank Credit Survey. The good news is that for the second straight quarter exports are strong and leading to increased profits for many businesses.

“The survey clearly reflects a softening in the economy over the last quarter,” says CBIA Vice President and Economist Peter Gioia. “That, combined with concern over the debt ceiling debate in Washington, has led to a downturn in business confidence and a significant uptick in firms experiencing problems obtaining credit.”

“It’s becoming increasingly apparent that the strength of economic recovery is now being adversely impacted by uncertainty at the federal and state level,” says Don Klepper-Smith, chief economist and director of research at DataCore Partners in New Haven.  “And when uncertainty abounds, businesses are a bit more reluctant to hire, sales volumes tend to taper off, and credit availability becomes that much more important to Connecticut businesses.”

More than a quarter (28 percent) of survey respondents said that credit availability is a problem for their companies—up from 21 percent last quarter and the highest percentage in more than a year.

Only 9 percent of business executives responding rated current conditions good or excellent, down from 10 percent last quarter. More than half (55 percent) said current conditions are poor or fair, the highest reading in more than a year.

More than half of respondents (52 percent) expect conditions to worsen over the next three months (July-September). Only 8 percent said that credit availability going forward will get better, down from 14 percent last quarter and the lowest number in more than a year.

“With greater economic uncertainty looming and mounting pressure on 2011 profit margins, credit becomes even more critical to small businesses,” says John Patrick, president and CEO of Farmington Bank. “And credit availability is especially important today because national fiscal and monetary policies, which usually help advance U.S. growth, may not be able to provide the stimulus needed to move the economy forward.”

Other key survey findings:

  • More than half of respondents (59 percent) said that without access to capital, they have been unable to grow or expand their business; 35 percent said they have reduced their workforce; 24 percent said they reduced compensation and benefits to employees; and another 24 percent said they were unable to increase inventories to meet demand.
  • Thirty-two percent of respondents used financing within the last three months.
  • Businesses said they need capital to invest in new plants and equipment (37 percent), expand operations (18 percent), hire new workers (13 percent), and maintain their current workforce (12 percent).
  • The majority (84 percent) of businesses that received capital used traditional bank loans and lines of credit; 30 percent used vendor credit; 25 percent used private loans; and 20 percent used credit cards. 

“As the national economic recovery heads into its third year, there is legitimate cause for concern,” says Marie O’Brien, president of the Connecticut Development Authority (CDA). “Credit availability is crucial to the overall health of Connecticut’s small business sector—those companies with fewer than 500 employees, responsible for sustainable new job creation. The lack of available credit will hinder efforts to grow our economy and create jobs.”

The CBIA/Farmington Bank Current Credit Conditions Index is 13.2, down from a high of 27.7 in the fourth quarter 2010.

Business executives are not optimistic about future credit conditions. The CBIA/Farmington Bank Future Expectations Index, which measures credit expectations three to six months from now, stands at 12.1—the lowest number since third quarter 2009. The overall CBIA/Farmington Bank Credit Availability Index also dipped—to 12.7—down from 21.8 last quarter, and the lowest number since third quarter 2009. 

The current availability index, which indicates the health of Connecticut’s credit markets, has two primary components: one that measures current conditions and one that measures expectations in the marketplace three to six months out.

  CBIA/Farmington Bank Total Credit Availability Index     2Q11

      Farmington Bank Current Credit Availability Index           13.2

      Farmington Bank Future Expectations Index                      12.1

      Farmington Bank Total Credit Availability Index                12.7

The credit survey, conducted by the Connecticut Business and Industry Association (CBIA) and DataCore Partners, was sponsored by Farmington Bank and the CDA. The methodology used to determine the index is similar to that used by The Conference Board to calculate consumer confidence measures. The survey was emailed to Connecticut businesses in June 2011. A total of 389 executives responded, for a 15 percent response rate and a margin of error of +/- 5 percent.

For a copy of the 2011 CBIA/Farmington Bank Credit Survey visit www.cbia.com/newsroom. For more information or to arrange an interview with Peter Gioia, CBIA vice president and economist, contact Nancy Andrews at 860-244-1957 or andrewsn@cbia.com.

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CBIA is the state’s largest business organization, with 10,000 member companies.

Filed Under: News Releases, Surveys, What's New Tagged With: ,
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