While the Connecticut economy continues to inch forward, credit conditions, which had shown slight improvement at the end of last year, appear to be slipping, according to the first-quarter 2011 CBIA/Farmington Bank credit survey Friday.Â
Only one in 10 business executives responding to the survey rated current conditions good or excellent, down from 14 percent last quarter.
Another 44 percent said current conditions are poor or fair, up significantly from last quarter (36 percent) but down from 50 percent one year ago.
“The economic recovery is being pushed and pulled in every direction.” said CBIA Vice President and Economist Peter Gioia. “And just when consumer spending started to improve, rising oil prices began siphoning off disposable income, causing market concerns.”
In another distressing sign, the 390 Connecticut business executives who responded to the CBIA survey said they were not overly optimistic that conditions would improve over the next three months. And only 14 percent of respondents said that credit availability going forward will get better, down from 17 percent last quarter, but up from 10 percent one year ago.
The one bright spot, Gioia said, is that exports are strong and leading to increased profits for many businesses.
“The bad news is that gas prices now exceeding $4.00 per gallon could further slow our economic recovery-making lenders more cautious,” Gioia said. “As a result, businesses have hit a speed bump in their efforts to obtain financing.”
More than one third of respondents (39 percent) expect conditions to deteriorate. That’s up from each of the last three quarters, but down from 44 percent a year ago. Less than a quarter (21 percent) of respondents said that credit availability is a problem for their companies-the same number as last quarter and the lowest percentage in more than a year.
Other key survey findings:
- More than half of all respondents (53 percent) said that without access to capital, they have been unable to finance increased sales; half said they have been unable to grow or expand their business; and 40 percent said they have reduced their workforce.
- 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 (23 percent), hire new workers (18 percent), and increase inventory (11 percent).
- The majority (78 percent) of businesses that received capital used traditional bank loans and lines of credit; 32 percent used credit cards; 29 percent used vendor credit; and 19 percent used private loans.
