Vermont CEOs predictably cautious about economy

first_imgSeptember 11, 2008Business Roundtable Releases Third Quarter CEO Survey (South Burlington) The chief executives of Vermont’s leading businesses are cautious about sales prospects for the fall and winter, but they continue to invest in the state’s economy hoping for the business climate to improve. The mood of the business community was assessed in the middle of the third quarter and released today by Vermont Business Roundtable Chairman Tim Volk and President Lisa Ventriss. “Clearly the expectations of the business community for robust economic activity have fallen since our last survey in late 2006,” Ventriss said. “These expectations seem to mirror the nationwide economic slowdown and gloomy predictions for the New England economy.” The Roundtable’s third quarter ’08 membership survey showed greater pessimism today against CEO expectations in the fourth quarter of 2006, when the last survey was conducted. In 2006, 73 percent of responding CEOs expected sales to increase in the first half of 2007. In August, 2008, when the latest survey was conducted, only 50 percent expected increased sales in the six-month period ahead. When those predicting “no change” are included however, Vermont’s economy fared better. Eighty-six percent of respondents thought sales would stay the same or get better in the next six months versus 96 percent in 2006. Chairman Volk, who is president of the Burlington-based marketing firm Kelliher Samets Volk, says the results of the CEO survey reflect the realities of the marketplace. “We have to be careful in making too many comparisons, because of the gap in the data,” he said, “but these numbers confirm what we are hearing and seeing. Unemployment in Vermont is up by one percent over last year, and those numbers are reflected in the 60 percent of employers who predict level or declining employment in the period just ahead.” Considering capital investments, 38 percent of the CEOs responding said they plan to increase capital spending. That sets an all-time low when measured against expectations over the five year history of the survey, which have ranged from a low of 40 percent in the third quarter of 2006 to a high of 62 percent in March of 2004. When those predicting “no change” are included, however, again, Vermont’s outlook improved. Ninety percent of respondents predicted that capital spending would stay the same or get better in the next six months, versus 95 percent in 2006. Ventriss also cautioned against a direct comparison between 2006 and 2008 based only on this data. “These are different times. This is a different economy. Some of the CEO members of the Roundtable have even changed,” she said. “The long-term value of this survey is that it establishes a new benchmark for gauging the views of the business community in the future.” Although the 2008 third quarter survey showed that eighty-two percent of CEOs expect their employment levels to stay the same or increase, the 18 percent predicting a decrease in employment is the largest group since the surveys began in 2004. If additional job losses come to pass, employment in Vermont would mirror the national trend. On Sept. 5 the U.S. Department of Labor reported that unemployment nationwide has reached 6.1 percent. In July, the Vermont Department of Labor pegged Vermont’s unemployment rate at 4.8 percent, a one point increase from a year ago. The Roundtable’s survey, however, neither predicts nor enumerates the number or quality of the jobs expected to be lost in the time ahead. The Roundtable’s CEO Economic Outlook Survey measures the attitudes of chief executive officers for 120 of the state’s top employers. Vermont’s construction, education, health services, finance, real estate, insurance, hospitality/leisure, manufacturing, information, transportation, utilities, professional/business services and non-profit industries are represented. The response rate for this quarter was 63 percent. Historically, rates have varied from 40 to 73 percent. 1. How do you expect your company’s sales to change inthe next six months? Sales INCREASE NO CHANGE DECREASE Q1 2004 83% 13% 4% Q2 2004 80% 15% 4% Q3 2004 71% 25% 4% Q4 2004 77% 22% 1% Q1 2005 78% 19% 3% Q2 2005 75% 23% 2% Q3 2005 74% 24% 2% Q4 2005 72% 24% 4% Q1 2006 78% 20% 2% Q2 2006 78% 22% 0% Q3 2006 69% 25% 6% Q4 2006 73% 23% 4% Q3 2008 51% 35% 14%Totals may not equal 100 due torounding. 2. How do you expect your company’s capital spending tochange in the next six months? Capital INCREASE NO CHANGE DECREASE Q1 2004 62% 30% 8% Q2 2004last_img