Birmingham‐Hoover Area Business Confidence Holds Steady At 56.9, ABCI Birmingham‐Hoover was essentially unchanged from last quarter’s 57.0 reading. The significant news is that the hiring indicator moved up 2.3 points to 56.1, forecasting solid job gains in the third quarter. Expectations for the business environment also rose. Indexes for sales, profits, and capital spending indicate continuing growth this quarter. Area firms should continue to see strong sales gains in the second quarter. Although down 2.0 points, the sales index is a robust 61.8 and 54.7 percent of panelists anticipate increased sales this quarter. Almost half of businesses expect profits to be about the same as in the second quarter and a net 24.5 percent forecast increase for an index of 56.1. Job growth is looking up in the third quarter forecast and Birmingham‐Hoover expectations are the second‐highest of the larger metros. While 54.7 percent foresee no change in hiring plans, a net 18.9 percent expect the pace to pick up. Capital spending should be moderately stronger with the index at 54.2 and a net 18.9 percent planning an increase. Birmingham‐Hoover firms in the construction and finance, insurance, and real estate industries have robust outlooks on every indicator for the third quarter. Job creation could be strongest in these sectors and in professional and other services as well as in transportation, information, and utilities. Area panelists in manufacturing and wholesale trade are concerned about weak profits and generally plan to curtail capital spending this quarter. Third Quarter 2014 Outlook Birmingham‐
Hoover
Alabama ABCI 56.9 55.5 National Economy 53.8 51.4 Alabama Economy 59.4 59.4 Industry Sales 61.8 59.7 Industry Profits 56.1 54.9 Industry Hiring 56.1 54.9 Capital Expenditures 54.2 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. Birmingham‐Hoover Metro Area: Business Environment Expectations Q3 2014 compared to Q2 2014 90
Optimism about the business environment rose in the Birmingham‐Hoover metro area. Executives expect strong improvement in the Alabama economy, with moderate expansion nationwide. Over half of panelists foresee growth at the same pace as in the second quarter. But 41.5 percent expect the state’s economic activity to pick up this quarter compared to 28.3 percent forecasting stronger U.S. growth. 80
National Economic Outlook ABCITM Birmingham‐Hoover 100
60
28.3
Better
70
Index
52.8
52.7 54.4 53.3 53.2
49.7 50.7
57.0 56.9
56.6
Remain the Same
15.1
Worse
50
0
40
10
20
30
40
50
60
60
Alabama Economic Outlook 30
20
Better
10
Remain the Same
Worse
0
Q3 Q4 Q1 Q2
Q3 Q4 Q1 Q2
2012 2013 2014
41.5
52.8
5.7
Q3
0
10
20
30
Percent 40
50
Birmingham‐Hoover Metro Area: Industry Performance Expectations Birmingham‐Hoover business confidence held steady in the third quarter of 2014. At 56.9, area optimism was close to its post‐recession high of 57.6 seen in second quarter 2012. The area ABCI is 1.4 points above the Alabama reading and all components are the same or higher than statewide levels. ABCI Birmingham‐Hoover in Context Q3 2014 compared to Q2 2014 Sales 60
55
54.7
Increase
50
35.9
No Change
9.4
Decrease
0
45
10
20
30
40
50
60
40
35
Profits Alabama
Birmingham‐Hoover
30
37.7
Increase
25
49.1
No Change
Q1
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011 2012
13.2
Decrease
0
10
20
30
40
50
60
60
32.1
Increase
54.7
No Change
13.2
0
10
20
30
40
50
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. ABCI by Metro Area Q3 2014 Capital Expenditures Alabama
30.2
Increase
58.5
10
56.9
Huntsville
11.3
0
55.5
Birmingham‐Hoover
No Change
Decrease
Hiring Plans Decrease
Q1
Q1
2013 2014 53.4
Mobile
20
30
40
50
60 55.5
Montgomery
Percent 59.0
50
52
54
56
58
60
The Center for Business and Economic Research would like to thank all Birmingham‐Hoover 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 Birmingham Business Alliance 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