ABCI Montgomery Recovers to Prerecession Levels Montgomery area business confidence rose 3.4 points to 58.8 on the second quarter 2014 ABCI survey, the highest reading of the four large metro areas. Business executives here are the most optimistic about prospects for the state’s economy and their own industry sales this quarter. All six ABCI components forecast improvement, although increases in hiring and capital spending will be weaker than last quarter. Second Quarter 2014 Outlook Montgomery Alabama ABCI 58.8 55.6 National Economy 57.8 52.5 Alabama Economy 62.5 58.4 Most Montgomery area businesses should see sales pick Industry Sales 65.6 61.6 up in the second quarter; the index climbed 9.5 points to 65.6 with 62.5 percent of panelists forecasting an increase Industry Profits 58.3 56.5 in sales and only 8.3 percent anticipating a decrease. Almost 44 percent expect profits to be higher, while 39.6 percent feel Industry Hiring 52.6 51.1 their industry’s profits will be about the same as in the first Capital Expenditures 55.7 53.7 quarter. The area profits index rose 4.5 points to 58.3. Job growth is likely to be modest in the second quarter. Index above 50 indicates positive outlook. The hiring index slipped 0.4 points to 52.6, with about 46 Index below 50 indicates negative outlook. percent seeing no change in the pace of hiring and a positive Black increase from previous quarter. Red decrease from previous quarter. Blue no change. net 12.5 percent expecting an increase. An index of 55.7 forecasts a moderate increase in capital investment. Almost Montgomery Metro Area: 46 percent of respondents anticipate no change from first quarter levels and 35.4 percent forecast an increase. Business Environment Expectations Montgomery area firms in transportation, information, Q2 2014 compared to Q1 2014 and utilities; financial activities; and other services are Panelists in the Montgomery metro area have a very positive optimistic about all aspects of business performance in the forecast for the Alabama economy in the second quarter of second quarter. Manufacturers should also fare well, despite 2014. Most (52.1 percent) expect stronger growth, while 37.5 modest gains in profits and hiring. Hiring is expected to percent think the pace will be about the same as last quarter. weaken in business services, healthcare, and retail trade. Over 85 percent of area business executives feel the U.S. ABCITM Montgomery economy should be stable or improving in the second quarter. 100
National Economic Outlook 90
Index
50
41.7
Remain the Same
70
60
43.8
Better
80
58.4
53.3
53.1 51.3
56.6 54.3 55.4 58.8
14.6
Worse
0
44.3
40
10
20
30
40
50
60 Alabama Economic Outlook 30
52.1
Better
20
37.5
Remain the Same
10
10.4
Worse
0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012 2013 2014
0
10
20
30
Percent 40
50
60
Montgomery Metro Area: ABCI Montgomery in Context Industry Performance Expectations Montgomery business confidence increased again this quarter; the area outlook has stayed in positive territory over the last five quarters. At 58.8, the metro’s second quarter ABCI is 5.5 points higher than a year ago. Local business optimism continues to be well above the statewide reading. Q2 2014 compared to Q1 2014 Sales 60
62.5
Increase
55
29.2
No Change
8.3
Decrease
0
Montgomery
50
10
20
30
40
50
60
70
Profits Alabama
45
40
35
43.8
Increase
30
39.6
No Change
25
16.7
Decrease
0
10
20
30
40
50
60
70
33.3
45.8
No Change
20.8
Decrease
0
10
20
30
40
Q1
Q1
Q1
2012 2013 2014
Businesses statewide and in the four largest metro areas are generally feeling optimistic about the economic environment and their industry prospects in the second quarter of 2014. Confidence registered above 50 in all areas for the first time since the second quarter of 2012. Passage of the Bipartisan Budget Act and implementation of the Affordable Care Act have helped remove some of the uncertainty that had been depressing sentiment, although Huntsville is still experiencing the effects of federal spending reductions. Hiring Plans Increase
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011
50
60
70
ABCI by Metro Area Q2 2014 Capital Expenditures 55.6
Alabama
35.4
Increase
45.8
No Change
0
10
20
30
40
50.7
Huntsville
18.8
Decrease
57.0
Birmingham‐Hoover
50
60
70
Percent Mobile
58.3
Montgomery
58.8
0
10
20
30
40
50
60
The Center for Business and Economic Research would like to thank all Montgomery metro area business executives who completed the second quarter 2014 ABCI survey during the first two weeks of March. We look forward to a continuing partnership with the Montgomery Area Chamber of Commerce and encourage you to return for the third quarter 2014 survey June 1‐15. For more details on the Alabama Business Confidence Index™, visit cber.cba.ua.edu/ABCI. Analysis provided by Carolyn Trent, Socioeconomic Analyst. Produced in partnership with the