Compass' Arizona Business Leaders Confidence Index® Lowers Forecast for the Fourth Quarter
Phoenix, Ariz.-- Compass Bank’s Business Leaders Confidence Index® (BLCI) panel members lowered their expectations for the fourth quarter. The BLCI dropped 2.8 index points to a reading of 65.5. Although the index is at its lowest level of 2004, this reading still signals significant growth during the fall quarter (a number above 50 signals an increasing economy). The index measures expectations on a scale of 0-100, with 50 being neutral.
Although all components contributed to the BLCI’s decline, the national outlook registered the largest decrease, driven by reports of the economic “soft patch” and the “presidential campaign” effect.
“Concern over rising prices and difficulty getting materials, coupled with reports of a slowdown in consumer spending led panel members to lower their expectations,” said Marshall J. Vest, director of economic and business research at the Eller College of Management at The University of Arizona. “Panelists from the Phoenix-Mesa metro area remain more optimistic than the rest of the state, perhaps because of differences in political make up. Tucson, for example, is traditionally more moderate and therefore less likely to feel that the economy is on the right track, which would explain the lower readings, especially for the national outlook.”
This quarter’s survey included a series of questions related to the price and availability of inputs. Even though material issues were prevalent, panel members identified the inability to hire skilled workers as the most important challenge affecting their ability to meet demand in the fourth quarter, with nearly half of the panel so indicating. Roughly one fourth identified higher energy costs, shortages of raw materials and high transportation costs as a constraint. Construction materials, steel and electronic components topped the list of materials that were hard to obtain. Panelists expect material prices to either continue increasing but at a slower rate (three of five panelists) or to stabilize during the fourth quarter (one in four).
"Business owners are always looking for information that will help them make better ss decisions" said George M. Boltwood, Compass' senior executive vice president and head of corporate banking. "The Arizona Business Leaders Confidence Index is a tool designed by Compass Bank to provide information that hopefully makes those decisions easier."
Although panel members became much less sanguine about the national outlook in the recent survey, almost 59% of panelists expect the nation’s economy to continue improving in the third quarter. Twenty-four percent expect no change, while another 17% expect a decrease. Panelists likewise trimmed expectations for Arizona’s economy by 2.6 points. However, at 70.9, the state index is a full ten points higher than the national index and is the highest BLCI component.
The BLCI is compiled by Compass Bank and its university partners at The University of Arizona’s Eller College of Management, The Center for Business and Economic Research at The University of Alabama, the Leeds School of Business at the University of Colorado and the University of Texas at Austin’s IC2 Institute. Complete results of all surveys can be found at www.blci.com.
The Economic and Business Research program at The University of Arizona’s Eller College of Management was established by the State Legislature more than 50 years ago to provide relevant economic data to the Arizona business community. The Eller College of Management supports more than 4,500 undergraduate and 600 graduate students. The Eller College is known for its innovative curriculum, internationally recognized faculty, advancing research, and excellence in entrepreneurship, MIS, and social responsibility. Eller ranks at the top in grant and research dollar generation, has a top five MIS Department, and has nationally ranked undergraduate and graduate programs. The College is located on The University of Arizona campus in beautiful Tucson, Arizona.
Compass Bank is a subsidiary of Compass Bancshares, Inc., a Southwestern financial holding company with approximately $28 billion in assets and 376 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 16 consecutive years and dividends per share have increased for 23 consecutive years.
The Eller College of Management at the University of Arizona is internationally recognized for pioneering research, innovative curriculum, distinguished faculty, excellence in management information systems, entrepreneurship, and social responsibility. U.S. News & World Report ranks the Eller undergraduate program #14 among public business schools and three of its programs are among the top 20 — Entrepreneurship, MIS, and Management. U.S. News & World Report ranks the Eller MBA Full-Time program #44 in the U.S. and #21 among public business schools. The College leads the nation’s business schools in generating grant funds for research. In addition to a Full-Time MBA program, the Eller College offers an Evening MBA program and the Eller Executive MBA. The Eller College of Management supports approximately 5,700 undergraduate and 700 graduate students on the UA campus in beautiful Tucson, Arizona.
Liz Warren-Pederson, Eller College of Management
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