Huntsville Area Business Confidence Negative but Steady Fourth Quarter 2013 Outlook ABCI Huntsville edged up 0.1 points to 45.8 on the fourth quarter survey, still negative but holding steady after strong improvement last quarter. This confidence reading is modestly better than the 44.3 recorded a year ago. However, the six components of the ABCI are all below 50 this quarter. With the sequester continuing and the FY2014 budget uncertain, more Huntsville area businesses see sales prospects weakening in the fourth quarter—the index is 2.9 points lower at 47.5. While 29.0 percent of panelists think sales are likely to increase, 36.2 percent forecast a decline. Profits could decline more sharply, with the index down 5.1 points to 43.5 and a net 20.3 percent of firms anticipating lower earnings. Hiring is the only industry indicator to move up; at 47.1 the index is 1.7 points above the third quarter expectation and forecasts a modest decline. Fifty‐eight percent of executives expect hiring to be the same as last quarter, although a net 10.2 percent plan to cut back. Huntsville’s capital spending index slipped 1.2 points to 42.0. In the fourth quarter, 43.5 percent of panelists plan to hold expenditures to third quarter levels, but 39.1 percent anticipate a decrease. Area panelists in finance, insurance, and real estate are moderately upbeat this quarter with an ABCI of 53.7 and positive outlooks for sales, profits, and hiring. Sentiment in Huntsville’s large professional, scientific, and technical services sector, while still negative, rose from 36.8 in the third quarter to 44.5. Prospects are modestly negative for other Huntsville services businesses, with a pickup in healthcare investment. ABCITM Huntsville 100
Huntsville
Alabama ABCI 45.8
51.9
National Economy 45.6
50.4
Alabama Economy 49.3
56.0
Industry Sales 47.5
54.3
Industry Profits 43.5
51.5
Industry Hiring 47.1
50.8
Capital Expenditures 42.0
48.4
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 2013 compared to Q3 2013 Huntsville outlooks for both the U.S. and Alabama economy continued to improve looking ahead to the fourth quarter. The national economy index is moderately negative at 45.6, up 3.5 points. Confidence in the Alabama economy is approaching the neutral level of 50, rising 4.7 points to 49.3 this quarter. National Economic Outlook 90
Index
60
40
31.9
Remain the Same
70
50
29.0
Better
80
47.0
43.7
39.1
Worse
55.0
45.7 45.8
48.3
44.3
40.4
0
10
20
30
40
50 Alabama Economic Outlook 35.6
30
26.1
Better
20
44.9
Remain the Same
10
29.0
Worse
0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013
Q4
0
10
20
Percent 30
40
50 Huntsville Metro Area: ABCI Huntsville in Context Industry Performance Expectations Huntsville is the only metro area where business confidence turned up even slightly on the fourth quarter ABCI survey. However, ABCI Huntsville still came in 6.1 points lower than the statewide index, marking 11 consecutive quarters of below average sentiment. Area businesses seem to be becoming used to the negative federal budget environment —the ABCI was stable despite impending battles over FY2014 funding. Q4 2013 compared to Q3 2013 Sales 29.0
Increase
65
34.8
No Change
60
36.2
Decrease
0
10
20
Alabama
Huntsville
55
30
40
50
60
Profits 50
45
40
23.2
Increase
33.3
No Change
35
43.5
Decrease
0
10
20
30
40
30
50
60
Hiring Plans 15.9
Increase
58.0
No Change
26.1
Decrease
0
10
20
30
40
50
60
20
30
Percent 53.3
Huntsville
39.1
Decrease
51.9
Birmingham‐Hoover
43.5
No Change
10
Panelists completed the fourth quarter ABCI survey during the first two weeks of September, amid a climate of continuing federal spending cutbacks and uncertainty about budget issues. Still, business confidence indicates at least modest economic expansion statewide and in the Birmingham‐Hoover, Mobile, and Montgomery metros. While the Huntsville area index is about flat compared to last quarter, it continues to forecast moderate contraction. Alabama
17.4
0
Q1
Q1
Q1
Q1
Q1
2009 2010 2011 2012 2013 ABCI by Metro Area Q4 2013 Capital Expenditures Increase
Q1
Q1
2007 2008
45.8
Mobile
40
50
60
58.0
Montgomery
54.3
0
10
20
30
40
50
60
The Center for Business and Economic Research would like to thank all Huntsville metro area business executives who completed the fourth quarter 2013 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 2014 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