Huntsville Business Confidence Strengthens in Third Quarter Third Quarter 2014 Outlook After edging into positive territory in the second quarter, Huntsville area business confidence moved up 2.7 points to 53.4 on the third quarter ABCI survey. A positive outlook for job creation and a better evaluation of the economic environment are the primary drivers of this optimism. All index values increased, although capital spending could still be curtailed. Following a strong increase in the second quarter, sales expectations edged up 0.4 points to 56.8. Forty‐eight percent of area firms forecast higher sales, while 20.8 percent think sales could be lower than last quarter. The profits index rose 0.8 points to 52.0, although it remained the weakest reading of the metro areas. A net 6.5 percent forecast stronger profits, while 44.2 percent anticipate no change. Hiring is beginning to pick up in the Huntsville metro and that trend should continue in the third quarter. The hiring index rose 8.6 points to 54.2, with 33.8 percent of executives planning to increase hiring and 49.4 percent forecasting no change. Capital spending is not likely to rebound this quarter—while 57.1 percent of firms expect to maintain current spending, a net 1.3 percent foresee a decrease. Huntsville businesses in financial activities and healthcare are the most optimistic this quarter, with industry ABCIs just over 56 and moderate job growth expected. Hiring should also pick up in manufacturing, and other services. Sentiment among professional, scientific, and technical services firms rose 5.4 points to 48.7, with flat sales, a slight increase in profits and hiring, and weaker capital spending forecasted. ABCITM Huntsville 100
ABCI 53.4 55.5 National Economy 50.0 51.4 Alabama Economy 58.8 59.4 Industry Sales 56.8 59.7 Industry Profits 52.0 54.9 Industry Hiring 54.2 54.9 Capital Expenditures 48.4 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. Huntsville Metro Area: Business Environment Expectations Q3 2014 compared to Q2 2014 Businesses in Huntsville are optimistic about the Alabama economy this quarter. The state index climbed 4.8 points to 58.8, with 48 percent expecting better growth and just 14.3 percent a worse performance. For the first time in nine quar‐
ters, activity at the national level is not seen as a drag on the Huntsville economy. The index is up 1.2 points to a neutral 50. 80
Better
70
Remain the Same
60
50
40
Alabama National Economic Outlook 90
Index
Huntsville 48.3
44.3 40.4
45.7 45.8
50.7
28.6
46.8
24.7
Worse
53.4
0
44.9
35.6
10
20
30
50 Alabama Economic Outlook 30
48.0
Better
20
37.7
Remain the Same
10
14.3
Worse
0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012 2013 2014
40
Q3
0
10
20
Percent 30
40
50 Huntsville Metro Area: ABCI Huntsville in Context Industry Performance Expectations Q3 2014 compared to Q2 2014 ABCI Huntsville moved closer to the statewide index on the third quarter 2014 survey, with the gap now just 2.1 points. Positive readings in both the second and third quarters of 2014 mark the first time that Huntsville has seen two consecutive quarters of optimism since the first half of 2011. Sales 65
60
48.0
Increase
55
31.2
No Change
20.8
Decrease
0
10
50
20
30
40
50
45
40
Profits Huntsville
30
44.2
No Change
Q1
Q1
2007 2008
24.7
Decrease
0
10
20
30
40
50
60
Hiring Plans 33.8
Increase
49.4
No Change
16.9
Decrease
0
10
20
30
40
50
Capital Expenditures 10
20
55.5
56.9
53.4
Mobile
22.1
0
ABCI by Metro Area Q2 2014 Huntsville
57.1
30
40
50
60
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. Birmingham‐Hoover
No Change
Decrease
Q1
Q1
Q1
Q1
Q1
Q1
2009 2010 2011 2012 2013 2014 Alabama
20.8
Increase
Alabama
35
31.2
Increase
55.5
Montgomery
Percent 59.0
50
52
54
56
58
60
The Center for Business and Economic Research would like to thank all Huntsville 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 Huntsville 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