Confidence Reflects Montgomery’s Stable Economy Montgomery area business confidence slipped a slight 0.3 points to a still robust 58.7 on the fourth quarter 2014 survey. The area ABCI has been steady at around 59 over the past three quarters and is 4.4 points above the 54.3 reported a year ago. Mobile area confidence matched Montgomery’s, with the two metros the most optimistic this quarter. Across industries, most Montgomery executives expect business sales to be stable or improving in the fourth quarter; 54.0 percent forecast an increase and 24.3 percent indicate no change from third quarter levels. Still, the sales index of 58.1 is down 3.4 points. After a 1.8 point rise to 59.5, the area outlook for profits is above that for sales this quarter. Montgomery area businesses are likely to create a moderate number of jobs in fourth quarter 2014. While the hiring index declined 1.6 points to 55.4, 40.5 percent of firms surveyed expect to increase hiring compared to 16.2 percent anticipating a decrease. Capital spending should continue to boost the Montgomery economy. The index of 60.8 is about the same as last quarter. Forty‐six percent plan to increase investment, while only 8.1 percent expect to cut back. Fourth quarter optimism is highest in the professional, scientific, and technical services sector, with all indicators strongly positive. Montgomery’s construction sector should fare well this quarter. ABCI indexes are also positive in manufacturing, financial activities, and retail trade. Manufac‐
turers forecast level sales, but along with construction and professional services, are the most likely to add jobs. ABCITM Montgomery 100
Fourth Quarter 2014 Outlook Montgomery ABCI 58.7 54.2 National Economy 57.4 51.6 Alabama Economy 60.8 56.4 Industry Sales 58.1 56.6 Industry Profits 59.5 54.4 Industry Hiring 55.4 52.5 Capital Expenditures 60.8 53.7 Index above 50 indicates positive outlook. Index below 50 indicates negative outlook. Black increase from previous quarter. Red decrease from previous quarter. Blue no change. Montgomery Metro Area: Business Environment Expectations Q4 2014 compared to Q3 2014 Of the state’s four largest metros, Montgomery area business executives have the highest expectations for both the U.S. and Alabama economies in fourth quarter 2014. The national economy index rose 3.6 points to 57.4, while Montgomery’s state index slipped 2.0 points to 60.8. Both indicate a strong fourth quarter economy that will support business activity. National Economic Outlook 90
46.0
Better
80
40.5
Remain the Same
Index
70
60
50
Alabama 53.3
51.3
13.5
Worse
56.6 54.3 55.4 58.8 59.0 58.7
0
10
20
30
40
50
44.3
60 Alabama Economic Outlook 40
30
51.4
Better
20
43.2
Remain the Same
10
Worse
5.4
0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2013 2014
0
Q4
10
20
30
Percent 40
50
60
Montgomery Metro Area: ABCI Montgomery in Context Industry Performance Expectations Business confidence in the Montgomery metro has come in close to 59 over the last three quarters. The fourth quarter reading of 58.7 is 4.5 points above the statewide ABCI. Area businesses have been optimistic since second quarter 2013, with the ABCI above 50 and higher than the Alabama index. Q4 2014 compared to Q3 2014 Sales 60
54.1
Increase
55
24.3
No Change
50
21.6
Decrease
0
10
20
30
40
50
60
45
40
Profits 35
Alabama
51.4
Increase
30
29.7
No Change
25
18.9
Decrease
0
10
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011
20
30
40
50
60
Trends in business confidence among the four largest metro areas were mixed this quarter. Mobile saw a solid uptick in optimism, while confidence dipped slightly in Montgomery. Both the Mobile and Montgomery ABCIs came in on top at 58.7, with relatively strong industry outlooks. Much weaker sales and hiring forecasts contributed to a marked drop in Birmingham‐Hoover confidence to 53.9. ABCI Huntsville posted the largest decline, with sentiment among Huntsville area business executives turning slightly negative at 49.7. 40.5
43.2
No Change
16.2
Decrease
0
10
20
30
40
Hiring Plans Increase
Q1
Q1
Q1
2012 2013 2014
50
60
ABCI by Metro Area Q4 2014 Capital Expenditures 54.2
53.9
Increase
46.0
Birmingham‐Hoover
No Change
46.0
Huntsville
8.1
Decrease
0
Alabama
10
20
30
40
50
60
Percent 49.7
Mobile
58.7
Montgomery
58.7
45.0
50.0
55.0
60.0
The Center for Business and Economic Research would like to thank all Montgomery metro area business executives who completed the fourth quarter 2014 ABCI survey during the first two weeks of September. We look forward to a continuing partnership with the Montgomery Area Chamber of Commerce and encourage you to return for the first quarter 2015 survey December 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