Arizona Business Leaders' Confidence Index Predicts Upbeat Sales During 4th Quarter
By UA News Services
State Economic Outlook Much Brighter; A Major Reversal in Interest Rates
Compass Bank's Business Leaders' Confidence Index(BLCI) predicts stronger industry sales during the fourth quarter, with more than two-thirds of panelists expecting moderate or strong increases in sales. Panelists now see interest rates moving upward, but are decidedly more upbeat for Arizona's economy than recorded last quarter.
The BLCI moved up 1.5 points, rising to 62.3 from a revised 60.8. The index measures expectations on a scale of 0-100, with 50 being neutral.
The Arizona economic outlook component jumped more than 5 points, to 65.5 from 60, with nearly 70 percent of respondents predicting a moderate or strong increase. More than 59 percent feel profits will increase and 44.8 percent expect capital equipment spending to increase. Panelists remain cautious about hiring plans as that component fell slightly more than one point to a score of 56.3; 35 percent of panelists predict a moderate or strong increase in employment levels in fourth quarter, while over half expect no change.
"These numbers don't yet suggest unrestrained enthusiasm in the economy," said Marshall J. Vest, director of economic and business research at the Eller College of Business and Public Administration at The University of Arizona, "but they are solid enough. Many are predicting the best holiday selling season the U.S. has had in the past three or four years. According to the National Retail Federations' mid-September forecast, holiday retail sales are going to be up 5.7 percent from 2002." Vest and his team at the University helped design and administer the survey, and each quarter summarize and report the results.
The largest swing in the index came in the expectations for interest rates, which registered a score of 62.1 in fourth quarter compared to 46.3 in the third quarter. Almost 51 percent of respondents are predicting either a moderate or strong increase in rates, 46 percent predict they will stay the same, and only 3 percent believe they will decrease.
"We've seen solid growth in the number of business men and women responding to the survey in Arizona," said George M. Boltwood, Compass' executive vice president and head of corporate banking. "As the number of respondents grows, we will eventually be able to segment the data and provide forecasts for different regions of the state and specific economic sectors within those regions-manufacturing versus retail, for example. I would encourage those interested in participating to register at www.blcindex.com."
The BLCI also is compiled by Compass and its university partners at The Center for Business and Economic Research at The University of Alabama, Mays Business School at Texas A&M University and the Leeds School of Business at the University of Colorado.
The Economic and Business Research program at The University of Arizona's Eller College of Business and Public Administration was established by the State Legislature more than 50 years ago to provide relevant economic data to the Arizona business community. The nationally ranked Eller College is a center for professional education and frontier-advancing research. The Eller College offers undergraduate, master's and doctorates in the traditional business disciplines-accounting, finance, marketing, economics, and management and policy-as well as cutting-edge fields such as management information systems and public administration. Innovative entrepreneurship, international business and executive education programs bridge the classroom with the real world.
Compass Bank is a subsidiary of Compass Bancshares Inc., a Southwestern financial holding company with $25.6 billion in assets and 358 full-service banking offices in Alabama, Arizona, Colorado, Florida, New Mexico and Texas. Compass Bancshares is among the top 40 U.S. bank holding companies by asset size and ranks among the top earners of its size based on return on equity. The company's earnings per share have increased for 15 consecutive years and dividends per share have increased for 22 consecutive years.
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