Local business leaders see good times in '06

Tucson business leaders' confidence followed the "more things change the more they stay the same" line for first-quarter economic expectations, the quarterly Compass Bank Business Leaders Confidence Index for Arizona shows.

Crunching leaders' thoughts about sales, profits, hiring, capital expenditure and national and state outlooks, University of Arizona economist Marshall Vest determined a first- quarter index reading of 60.3, the same as at the start of 2005.

Index readings above 50 indicate an expanding economy.

"All four industry readings are near or above 60, well beyond the dividing line between expansion and contraction," Vest wrote in the survey's analysis.

Events of the past year, however, shook local leaders enough after Hurricane Katrina to give the index its lowest reading in Tucson in the last quarter, 53.2, since the index started in 2003.

Statewide, the first-quarter index is 59.9, the third quarter in a row the index failed to break 60.

For the first time, though, Tucson leaders showed more confidence, 60.3 to 60.1, than business leaders in Phoenix.

"There was an uptick in panel members this time, and most are from Tucson and most are affiliated with the real estate industry," Vest said in an interview.

The Internet survey was taken in mid-December and involved 468 panelists, roughly half from Tucson, half from Phoenix.

Despite the identical first-quarter index for 2005 and 2006, individual categories had notable differences.

Tucson gave capital expenditures 4 more points this year (61.0) and hiring moved up 2.2 points (59.9), but national outlook fell 5 points (55.4 - the weakest category).

"They're confident of their own industries but worry about the national economy," Vest said. "The first quarter (in Tucson) is going to be a good, solid quarter."

A survey question not figured into the index addressed expectations for employee compensation.

The largest percentage of respondents, nearly 1 in 4, expects to give raises between 3 percent and 4 percent.

"What we are seeing is movement away from cost-of-living increases and based more on performance and giving bonuses," Vest said.

The entire survey is at www.blci.com/arizona/index.jsp.

Compass Bank Business Leaders Confidence Index for Tucson for the first quarter and the index from a year ago. A rating of 50 indicates no change. A rating above that indicates confidence for improvement.

Highlights

Category 1st Q 2006 1st Q 2005

Overall 60.3 60.3

Sales 61.5 59.8

Profits 58.8 59.3

Hiring 59.9 57.7

Capital expenditures 61.0 57.0

State outlook 65.3 67.2

National outlook 55.4 60.9

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.