Optimism and frustration
After two straight years of declines, an increased number of Connecticut businesses plan to hire workers in the coming year, though still not as many as those who indicated they would increase hiring on the eve of the credit crisis in 2008.
Just 47 percent of survey respondents told the Connecticut Business & Industry Association and BlumShapiro they would resume hiring any time soon. That was up from 38 percent of companies that responded a year ago, but down from the 56 percent that indicated so in the summer of 2008.
CBIA and the West Hartford-based accounting firm BlumShapiro conducted the poll via email in June, with nearly 700 companies responding, most of them small- and mid-size businesses. More than a third of respondents were manufacturers; professional or business services made up a smaller percentage of this year”™s participants. The poll includes a margin of error of plus or minus 2.6 percent.
While about the same number of businesses as last year expect to record a profit, at just over 40 percent, twice as many think they will break even and just half as many expect to suffer a loss.
As further evidence of growing optimism, the surveyors found, more than 60 percent of businesses expect conditions to be at least average in a year”™s time, while just 9 percent of companies think things will be going poorly. Still, 43 percent expect sales to be flat this year and nearly half say it may not be until 2012 at the earliest when they have fully recovered from the recession.
“What most businesses are saying is they are looking toward 2012 as to when they are going to be back to normal,” said Jay Sattler, a partner with BlumShapiro. “I see a little bit of a pendulum swing, and it seems like there is a little more optimism on profitability and growth.”
After several years during which executives cited the high cost of doing business in Connecticut as their top challenge, this year that changed with declining revenue the top concern. It came as a surprise to Sattler although he sees the logic.
“I think in this recessionary period a lot of businesses stepped back and said, ”˜How can we be more efficient?”™” Sattler said. “Now they are looking at the top line and finding their customer base has fallen.”
When it comes to business costs, health care insurance premiums are still seen as the most burdensome, as cited by 43 percent of respondents, closely trailed by payroll costs according to 39 percent of companies polled.
When asked for the single greatest advantage to running a business in Connecticut, 18 percent of respondents replied “nothing” ”“ which CBIA says should be a wakeup call for elected officials and those seeking office. Perhaps incredibly, just 1 percent of respondents ”“ or a grand total of about seven ”“ consider tax credits and government incentives an advantage of doing business in Connecticut, despite efforts by policymakers to improve those available for small businesses, such as a tax credit for new hires.
“This research corroborates that Connecticut”™s economy is at a critical junction,” said Don Klepper-Smith, chief economist at DataCore Partners L.L.C. and chairman of the governor”™s council of economic advisers, in a prepared statement.
“We now have some serious, long-term fiscal issues as well as legitimate concerns about a business climate that”™s increasingly difficult to navigate,” he said. “If we are not proactive with policies to vastly improve business competitiveness, my primary concern is that our state could easily develop a ”˜slow bleed”™ where businesses and residents leave Connecticut and undermine its long-term economic vitality.”