Montgomery Area Confidence Holds Steady, Stays on Top ABCI Montgomery ticked up 0.2 points to 59.0 on the third quarter 2014 survey. Area executives are the most optimistic of Alabama’s four largest metro areas for a second straight quarter. Prospects for hiring and capital investment improved significantly and are the highest statewide. Montgomery panelists are also the most optimistic about the state’s economy and their industry profits this quarter. Most Montgomery businesses expect third quarter sales to come in at or above second quarter results. The sales index registered 61.5 and a net 41 percent forecast higher sales, while 43.6 percent foresee no change. On balance, profits should move higher, with the index at 57.7 and a net 28.2 percent forecasting gains. Over half of panelists think profits will be about the same as last quarter. Job creation is expected to show a sizeable increase in the third quarter, with the hiring index up 4.4 points to 57.0. The 38.5 percent planning to boost hiring compares to 12.8 percent expecting a decline; 48.7 percent plan to hire at the same pace as last quarter. Capital spending should pick also—
the index rose 5.2 points to 60.9. Almost 49 percent forecast an increase and 41 percent see no change from last quarter. All industries except retailing are optimistic this quarter. Montgomery businesses in manufacturing and professional, scientific, and technical services are the most positive, with all indicators at 60 or above. Sentiment is also high in other services and in transportation, information, and utilities. Hiring growth in financial activities is likely to be subdued. ABCITM Montgomery 100
80
Index
Montgomery Alabama ABCI 59.0 55.5 National Economy 53.8 51.4 Alabama Economy 62.8 59.4 Industry Sales 61.5 59.7 Industry Profits 57.7 54.9 Industry Hiring 57.0 54.9 Capital Expenditures 60.9 52.6 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 Q3 2014 compared to Q2 2014 Montgomery area business executives continue to feel very optimistic about trends in the Alabama economy. The index moved up 0.3 points to 62.8; 53.8 percent report a better outlook this quarter and 7.7 percent have a worse one. Growth in the U.S. economy is likely to be weaker than for the state. The national economy index is at 53.8 and just 38.5 percent forecast stronger gains in the third quarter. 38.5
Better
70
50
Third Quarter 2014 Outlook National Economic Outlook 90
60
56.6 54.3 55.4
53.3
53.1 51.3
43.6
Remain the Same
58.8 59.0
18.0
Worse
44.3
0
10
20
30
40
50
40
60 Alabama Economic Outlook 30
20
Better
10
Remain the Same
0
53.8
38.5
7.7
Worse
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2013 2014
0
10
20
30
Percent 40
50
60
Montgomery Metro Area: ABCI Montgomery in Context Industry Performance Expectations Business confidence in the Montgomery metro rose a slight 0.2 points on the third quarter ABCI survey. At 59.0, the Montgomery reading is 3.5 points above the statewide ABCI. Area optimism is 2.4 points higher than a year ago and has stayed positive for six consecutive quarters. Q3 2014 compared to Q2 2014 Sales 60
48.7
Increase
55
43.6
No Change
50
7.7
Decrease
0
10
20
30
40
50
60
45
40
Profits 35
38.5
Increase
30
51.3
No Change
0
10
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011
20
30
40
50
60
48.7
No Change
12.8
0
10
20
30
40
For the third quarter of 2014, businesses statewide and in the four largest metro areas continue to feel optimistic about the economic environment and their industry prospects. The area ABCI is highest in the Montgomery and Birmingham‐Hoover metros, where confidence was about the same as last quarter. ABCI Mobile matched the statewide average of 55.5, although expectations moderated from their second quarter level. Huntsville executives are more optimistic on every indicator this quarter and show the largest improvement in the ABCI. 38.5
Increase
Q1
Q1
Q1
2012 2013 2014
Hiring Plans Decrease
Montgomery
25
10.3
Decrease
Alabama
50
60
ABCI by Metro Area Q3 2014 Capital Expenditures Alabama
0
10
53.4
Mobile
10.3
Decrease
56.9
Huntsville
41.0
No Change
Birmingham‐Hoover
48.7
Increase
55.5
20
30
40
50
60
Percent 55.5
Montgomery
59.0
50
52
54
56
58
60
The Center for Business and Economic Research would like to thank all Montgomery metro area business executives who completed the third quarter 2014 ABCI survey during the first two weeks of June. We look forward to a continuing partnership with the Montgomery Area Chamber of Commerce and encourage you to return for the fourth quarter 2014 survey September 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