Business Executives Down On Economy

But Expect To Hire More Workers

HARTFORD — Slow job growth in Connecticut is causing concern among businesses, according to the Connecticut Business & Industry Association’s (CBIA’s) first-quarter 2005 economic survey of business executives, which projects economic conditions for the following three months. But, surprisingly, they also report plans to add jobs.

There is increasing concern about the state’s slow economic performance and job-growth rate compared with US job and performance figures; Connecticut has only recovered 36 percent of the jobs lost in the last recession versus 90 percent recovery nationwide. The survey results indicate that the economic recovery that has been underway for two years may have peaked, particularly within the state.

Sixteen percent of respondents expect the national economy to worsen, compared with only four percent last quarter and six percent a year ago. Only 39 percent expect the economy to improve, compared with 50 percent last quarter and 77 percent a year ago.

The outlook for the state’s economy is less promising. Twenty-eight percent of business managers said they expect Connecticut’s economy to worsen, compared with six percent last survey and ten percent a year ago.

“One quarter’s results may be just a blip, but they certainly raise a red flag regarding the sustainability and strength of the economic recovery in Connecticut,” said Peter Gioia, CBIA economist.

However, respondents’ outlooks for their own industries are a little better. Thirty-four percent expect improvement and 49 percent expect things to remain the same. But 18 percent expect conditions for their industry to worsen; that is up from 11 percent in the past three quarters.

Nevertheless, many business executives say they expect to expand their workforces this year. Thirty-two percent of respondents plan to add jobs, up from 24 percent last quarter. Another 59 percent expect their workforces to remain stable. Only ten percent think they will decrease employment.

“One of the biggest problems facing the economy since the beginning of 2002 has been the small number of new jobs being created in Connecticut, but the news looks promising for the upcoming quarter,” said Mr Gioia. “This survey indicates companies will be hiring to address their long-building need for additional workers. It also confirms similar forecasts from the New England Economic Project, the University of Connecticut, and the Connecticut Department of Labor.”

Business managers also expect wage, compensation, and benefit costs to rise. Fifty percent expect wages to increase, compared with 47 percent last quarter. Fifty-three percent expect increases in compensation and benefit costs. That is up from 45 percent last quarter and 51 percent a year ago. Seven percent expect these costs to decrease, up from four percent last quarter.

The survey was conducted in February and March. Approximately 2,000 surveys were mailed or emailed to executives around the state. A total of 262 surveys were completed, for a return rate of 13.2 percent and a margin of error of plus or minus 6.19 percent.

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