ABCI Huntsville Back Above 50 on Second Quarter Outlook Huntsville area business confidence moved back into positive territory for the second quarter of 2014, following seven quarters of negative outlook. The composite ABCI climbed 5.8 points to 50.7, propelled by strong increases in all components except hiring. Still, concerns about national economic policies continue to constrain hiring and capital investment. Sales expectations surged 9.1 points to 56.4 and almost 48 percent of firms surveyed forecast higher sales than in first quarter 2014. Profits should generally be improving, but at a slower pace than sales. With the profits index up 5.4 points to 51.2, about 71 percent of Huntsville area panelists see profits as stable to increasing this quarter. The prolonged period of funding uncertainty and still‐
reduced federal spending continue to dampen job creation in the Huntsville metro area. The hiring index slipped 1.3 points to 45.6—while 54 percent of firms see no change in hiring, a net 11.1 percent plan to cut back. Capital spending prospects remain subdued, as 46.2 percent of businesses plan to reduce investment in the second quarter. Huntsville businesses in other services, including local government and nonprofits, are moderately optimistic about their prospects. Manufacturers, healthcare concerns, and financial activities firms see all aspects of their local industry as improving or flat except hiring, where they expect reductions. Sentiment among professional, scientific, and technical services businesses remains negative at 43.3 this quarter. ABCITM Huntsville Second Quarter 2014 Outlook Huntsville Alabama ABCI 50.7 55.6 National Economy 48.8 52.5 Alabama Economy 54.0 58.4 Industry Sales 56.4 61.6 Industry Profits 51.2 56.5 Industry Hiring 45.6 51.1 Capital Expenditures 48.0 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. Huntsville Metro Area: Business Environment Expectations Q2 2014 compared to Q1 2014 Sentiment about the business environment improved significantly among Huntsville panelists on the second quarter ABCI survey. With the state index up 5.5 points to 54.0, executives expect the Alabama economy to be supportive of local growth this quarter. Panelists are almost evenly divided on the U.S. outlook, with the index mildly negative at 48.8. 100
National Economic Outlook Index
90
80
Better
70
Remain the Same
60
45.7 45.8 44.9 50.7
48.3
44.3 40.4
40
31.8
33.3
Worse
55.0
50
34.9
0
35.6
10
20
30
Alabama Economic Outlook 30
39.7
Better
20
36.5
Remain the Same
10
23.8
Worse
0
Q2
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012 2013 2014
40 0
10
20
Percent 30
40 Huntsville Metro Area: ABCI Huntsville in Context Industry Performance Expectations At 50.7 ABCI Huntsville indicates optimism, albeit mild, for the first time since the second quarter of 2012. Although the gap has narrowed, Huntsville’s business confidence is 4.9 points below the statewide index this quarter, making 13 consecutive quarters of below‐average sentiment. Still, the area index is up 15.1 points from the second quarter of 2013. Q2 2014 compared to Q1 2014 Sales 65
47.6
Increase
60
28.6
No Change
Alabama
55
23.8
Decrease
50
0
10
20
30
40
50
60
45
Profits 40
33.3
Increase
35
38.1
No Change
30
Q1
Q1
2007 2008
28.6
Decrease
0
10
20
30
40
50
17.5
54.0
No Change
28.6
Decrease
0
10
20
30
40
50
Q1
Q1
Q1
Q1
Q1
Q1
2009 2010 2011 2012 2013 2014 60
Hiring Plans Increase
Huntsville
60
Businesses statewide and in the four largest metro areas are generally feeling optimistic about the economic environment and their industry prospects in the second quarter of 2014. Confidence registered above 50 in all areas for the first time since the second quarter of 2012. Passage of the Bipartisan Budget Act and implementation of the Affordable Care Act have helped remove some of the uncertainty that had been depressing sentiment, although Huntsville is still experiencing the effects of federal spending reductions. ABCI by Metro Area Q2 2014 Capital Expenditures 55.6
Alabama
13.8
Increase
40.0
No Change
10
20
30
50.7
Huntsville
46.2
Decrease
0
57.0
Birmingham‐Hoover
40
50
60
Mobile
58.3
Montgomery
58.8
Percent 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 second quarter 2014 ABCI survey during the first two weeks of March. We look forward to a continuing partnership with the Huntsville Chamber of Commerce and encourage you to return for the third quarter 2014 survey June 1‐15. For more details on the Alabama Business Confidence Index™, visit cber.cba.ua.edu/ABCI. Analysis provided by Carolyn Trent, Socioeconomic Analyst.
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