Huntsville Business Confidence Weakens Amid Uncertainty Fourth Quarter 2014 Outlook After two quarters of positive outlook, Huntsville area business confidence turned slightly negative for the fourth quarter of 2014. The ABCI fell 3.7 points to 49.7, with broad declines in sentiment about the economic environment and all industry measures except capital expenditures. This makes five straight years that fourth quarter sentiment has been below 50. Huntsville businesses generally expect a modest uptick in sales, with the sales index at 54.0. The reading is down 5.0 points, however, as 31 percent forecast higher fourth quarter sales compared to 48 percent last quarter. A decline of 4.6 points puts the profits index at 47.4—23.5 percent of firms expect profits to rise, while 33.8 percent forecast a decrease. Around 54 percent of area firms plan to hire at the same level as in the third quarter. But the hiring index is down 4.9 points to 49.3 and a negative net 4.4 percent of survey partici‐
pants plan to cut back on hiring in the fourth quarter. At 48.5, the capital expenditures index is up a slight 0.1 points. Almost 53 percent expect to invest at the same level as last quarter and only a net 2.9 percent plan to reduce spending. Huntsville businesses in healthcare are moderately opti‐
mistic, although hiring could be flat. Other services have a mildly positive outlook and expect a modest increase in jobs. Area manufacturers plan to maintain the status quo except for reduced capital spending. The outlook in financial activities is much weaker than last quarter. Sentiment is lowest among professional services firms, where sales and hiring should be flat and profits and capital spending are expected to drop. ABCITM Huntsville 100
ABCI 49.7 54.2 National Economy 47.1 51.6 Alabama Economy 54.0 56.4 Industry Sales 51.8 56.6 Industry Profits 47.4 54.4 Industry Hiring 49.3 52.5 Capital Expenditures 48.5 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. Huntsville Metro Area: Business Environment Expectations Q4 2014 compared to Q3 2014 Huntsville’s outlook on the U.S. economy returned to negative territory in the fourth quarter amid uncertainty about the FY2015 federal budget and midterm elections. The national economy index fell 2.9 points to 47.1. Area businesses still have a positive Alabama outlook, although the state index is down 4.8 points to 54.0. 80
Better
70
Remain the Same
60
50
40
Alabama National Economic Outlook 90
Index
Huntsville 45.7 45.8
44.3
40.4
50.7
53.4
22.1
47.1
30.9
Worse
49.7
0
44.9
35.6
10
20
30
40
60
Alabama Economic Outlook 30
26.5
Better
20
61.8
Remain the Same
10
11.8
Worse
0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2013 2014
50
Q4
0
10
20
30
40
Percent 50
60
Huntsville Metro Area: ABCI Huntsville in Context Industry Performance Expectations Huntsville business confidence moved down a steep 3.7 points to 49.7 on the fourth quarter 2014 survey. Statewide, the drop in confidence was 1.3 points, with steady and improving outlooks in Montgomery and Mobile partially countering declines in the Huntsville and Birmingham‐Hoover metros. Still, ABCI Huntsville is above the 45.8 reading of a year ago. Q4 2014 compared to Q3 2014 Sales 65
30.9
Increase
44.1
No Change
Alabama
Huntsville
60
55
25.0
Decrease
50
0
10
20
30
40
50
60
Profits 45
40
23.5
Increase
35
42.7
No Change
30
Q1
Q1
2007 2008
33.8
Decrease
0
10
20
30
40
50
60
Hiring Plans 20.6
Increase
54.4
No Change
25.0
Decrease
0
10
20
30
40
50
60
22.1
52.9
No Change
0
10
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. 20
30
40
50
Alabama
54.2
Birmingham‐Hoover
53.9
Huntsville
25.0
Decrease
ABCI by Metro Area Q4 2014 Capital Expenditures Increase
Q1
Q1
Q1
Q1
Q1
Q1
2009 2010 2011 2012 2013 2014 60
49.7
Mobile
58.7
Montgomery
58.7
Percent 45.0
50.0
55.0
60.0
The Center for Business and Economic Research would like to thank all Huntsville 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 Huntsville 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