Area Business Confidence Weakens, but Stays Positive ABCI Birmingham‐Hoover registered 53.9 on the fourth quarter 2014 survey, slightly above the 53.3 recorded a year ago. Still, confidence is down 3.0 points from last quarter’s outlook. While every component of the index is lower this quarter, they remain above 50 and indicate at least modest improvement in the area’s overall business performance. Fourth quarter sales trends should be positive—despite a 4.6 point decline, the sales index is at 57.2. Almost 46 percent of firms forecast higher sales compared to 18.6 percent expecting a decrease. The profits index slipped just 0.6 points to 55.5; 42.4 percent of panelists expect level earnings and a net 20.4 percent anticipate increased profits. The outlook for hiring saw the biggest drop, falling 4.8 points to a mildly positive 51.3. Most area businesses expect to hire at the same level as last quarter, while a net 6.8 percent plan to increase job growth. Capital spending should pick up modestly—the index is 52.5, with 50.9 percent forecasting no change and a net 11.9 percent an increase. Birmingham‐Hoover construction firms are the most optimistic on every industry indicator, while professional services businesses are moderately optimistic across the board. Although manufacturers expect moderate gains in sales and hiring, profits and investment could be level this quarter. Confidence tumbled in the area’s financial services sector, falling from 63.0 to 47.2 as firms expect weaker profits, hiring, and capital spending in the fourth quarter. Fourth Quarter 2014 Outlook Birmingham‐
Hoover
Alabama ABCI 53.9 54.2 National Economy 52.1 51.6 Alabama Economy 54.7 56.4 Industry Sales 57.2 56.6 Industry Profits 55.5 54.4 Industry Hiring 51.3 52.5 Capital Expenditures 52.5 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. Birmingham‐Hoover Metro Area: Business Environment Expectations Q4 2014 compared to Q3 2014 90
Executives in the Birmingham‐Hoover metro area are less optimistic about the business environment this quarter. While still mildly positive, the U.S. economy index slipped 1.7 points to 52.1. The state’s economy is expected to perform better than the nation’s, although the Alabama outlook declined 4.7 points to 54.7. Fewer than 24 percent of panelists see either economy weakening in the fourth quarter. 80
National Economic Outlook ABCITM Birmingham‐Hoover 100
60
30.5
Better
70
Index
52.7 54.4 53.3 53.2
49.7 50.7
57.0 56.9
53.9
45.8
Remain the Same
23.7
Worse
50
0
40
10
20
30
40
50
Alabama Economic Outlook 30
20
Better
10
Remain the Same
40.7
39.0
20.3
Worse
0
Q4 Q1 Q2
Q3 Q4 Q1 Q2
Q3
2012 2013 2014
Q4
0
10
20
Percent 30
40
50
Birmingham‐Hoover Metro Area: Industry Performance Expectations Birmingham‐Hoover business confidence dropped three points to 53.9 on the fourth quarter 2014 survey. Area sentiment was below the statewide ABCI for the first time since the fourth quarter of 2011. Still local business executives have been at least slightly optimistic, with the area ABCI above 50, for the last eight quarters. ABCI Birmingham‐Hoover in Context Q4 2014 compared to Q3 2014 Sales 60
45.8
Increase
55
35.6
No Change
50
18.6
Decrease
0
10
20
30
40
50
60
45
40
Profits 35
39.0
Increase
30
42.4
No Change
25
Q1
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011 2012
18.6
Decrease
0
10
20
30
40
50
60
Hiring Plans 27.1
Increase
52.5
No Change
20.3
Decrease
0
10
Alabama
Birmingham‐Hoover
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. Alabama
54.2
Birmingham‐Hoover
53.9
30.5
Increase
50.9
No Change
18.6
0
10
ABCI by Metro Area Q4 2014 Capital Expenditures Decrease
Q1
Q1
2013 2014 Huntsville
20
30
Percent 40
50
49.7
Mobile
58.7
Montgomery
58.7
60 45.0
50.0
55.0
60.0
The Center for Business and Economic Research would like to thank all Birmingham‐Hoover 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 Birmingham Business Alliance 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