Arizona Business Leaders Confidence Index® signals slight upswing for second quarter 2005
Phoenix, AZ – March 31, 2005 – According to the second quarter 2005 Arizona Business Leaders Confidence Index® (BLCI), local business sentiment is on the rise again, reversing a modest downward trend of the past two surveys. The BLCI increased from 62.3 to 62.8, with overall confidence remaining at positive levels.
“The upswing in the Arizona BLCI parallels results from national surveys of business confidence,” said Marshall Vest, director of economic and business research at Eller College of Management at The University of Arizona. “At this level, the index is signaling above-trend growth during the spring quarter, as a number above 50 signals belief among panelists that there will be improving business conditions.”
According to the quarterly survey, all four questions related to industry expectations moved higher, led by capital expenditures and sales. Capital spending plans for the second quarter jumped by 3.1 points to a reading of 62.4. Investment spending remains very strong as companies move to acquire equipment and software, as well as more office and warehouse space. Expectations for industry sales are now the strongest BLCI component at 65.9, up 2.8 points from the prior quarter. The outlook for industry profits improved modestly for the second quarter, with over fifty percent now expecting a moderate or strong increase. Hiring expectations registered an increase and reached 60 for the first time since the survey began two years ago.
While expectations of industry performance were up, panelists lowered their outlook for the overall economy, both at the state and national levels. Expectations for Arizona’s economy slipped by 3 points, but remains the second strongest component of the BLCI at 65.3. Similarly, the national economic component slipped 1.4 points to 61.9.
“Based on the steadily growing number of participants, the BLCI is emerging as a unique and accurate bellwether of Arizona’s business environment,” said George Boltwood, Compass' senior executive vice president and head of corporate banking. “As the only localized, quarterly index of its kind, we are pleased to continue providing this insightful tool for Arizona’s business leaders as they execute plans in 2005.”
This quarter’s survey also asked Arizona business leaders a series of questions regarding their efforts to control spiraling healthcare costs. Healthcare premiums comprise more than five percent of fixed costs for more than a third of the companies represented in the survey, and many are now passing on increases to employees. Overall, 45.2 percent increased employee contributions, 36.3 percent increased employee co-pays, and 31.5 percent increased employee deductibles. Some 42.8 percent changed benefits offered to employees, 38 percent changed healthcare insurance carriers and 13.4 percent established healthcare savings accounts. Significantly, 2.4 percent stopped offering healthcare benefits in the past three years to join the remaining 14.4 percent who do not offer coverage for employees.
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. Visit www.eller.arizona.edu for more information.
Compass Bank is a subsidiary of Compass Bancshares, Inc., a Southwestern financial holding company with $28.2 billion in assets and 382 full-service banking offices in Alabama, Arizona, Colorado, Florida, New Mexico and Texas. Compass Bancshares is among the top 30 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 17 consecutive years and dividends per share have increased for 24 consecutive years. Additional information about Compass, a member of the S&P 500 Index, can be found at www.compassweb.com.
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