Birmingham‐Hoover Area Business Confidence Improves ABCI Birmingham‐Hoover rose 3.8 points to 57.0 for the second quarter of 2014, with optimism 4.3 points higher than a year ago. All components of the ABCI except capital spending posted solid gains. Growth in sales and profits will be the primary drivers of the area economy this quarter, while hiring and investment should show moderate improvement. Area firms should see strong sales gains in the second quarter. The sales index rose 7.5 points to 63.8 and 63.1 percent of panelists expect sales to increase. Profits are also expected to improve. At 58.8, the index is up 4.3 points and over 86 percent of executives forecast even or rising profits. Of the four metros tracked by the ABCI, Birmingham‐
Hoover is the most optimistic about job growth this quarter. The hiring index rose 4.2 points to 53.8, with 67.7 percent expecting no change and a positive net 13.9 percent fore‐
casting an increase in hiring. Capital spending should increase moderately—the index registered 55.8 and a net 23 percent of panelists expect to boost investment, while 55.4 percent anticipate no change from first quarter levels. Birmingham‐Hoover businesses in construction, manu‐
facturing, and other services are positive on every industry metric and the most likely to increase hiring. Professional services firms expect modest job growth, but employment in financial activities and wholesale trade could be flat. Trans‐
portation, information, and utilities has the only industry ABCI below 50, with negative profits and hiring forecasts. ABCITM Birmingham‐Hoover 100
90
Second Quarter 2014 Outlook Birmingham‐
Hoover
Alabama ABCI 57.0 55.6 National Economy 51.2 52.5 Alabama Economy 58.5 58.4 Industry Sales 63.8 61.6 Industry Profits 58.8 56.5 Industry Hiring 53.8 51.1 Capital Expenditures 55.8 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. Birmingham‐Hoover Metro Area: Business Environment Expectations Q2 2014 compared to Q1 2014 Executives in the Birmingham‐Hoover area are optimistic about prospects for the Alabama economy in the second quarter. The state index is up 4.5 points to 58.5 and over 90 percent forecast growth at the same or a faster pace than last quarter. However, sentiment about the U.S. economy is only mildly positive, with the national index at 51.2. National Economic Outlook 80
32.3
Better
Index
70
60
57.6
52.8
52.7 54.4 53.3 53.2
49.7 50.7
57.0
41.5
Remain the Same
26.2
Worse
50
0
40
10
20
30
40
50
50
Alabama Economic Outlook 30
20
Better
10
Remain the Same
0
43.1
47.7
9.2
Worse
Q2
Q3 Q4 Q1 Q2
Q3 Q4 Q1 Q2
2012 2013 2014
0
10
20
30
Percent 40
Birmingham‐Hoover Metro Area: ABCI Birmingham‐Hoover in Context Industry Performance Expectations Looking ahead to the second quarter of 2014, business confidence improved both statewide and in the Birmingham‐
Hoover area. All components of the metro ABCI, except the U.S. outlook, are higher than their statewide readings. ABCI Birmingham‐Hoover is above its prerecession reading of 56.6 from third quarter 2007 for only the second time. Q2 2014 compared to Q1 2014 Sales 60
63.1
Increase
Birmingham‐
Hoover
55
26.2
No Change
50
10.8
Decrease
0
10
20
30
40
50
60
70
45
Alabama
40
Profits 35
46.2
Increase
30
40.0
No Change
25
Q1
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011 2012
13.8
Decrease
0
10
20
30
40
50
60
70
Hiring Plans 23.1
Increase
67.7
No Change
9.2
Decrease
0
10
20
30
40
50
60
70
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 50.7
Huntsville
10.8
10
57.0
Birmingham‐Hoover
55.4
No Change
0
55.6
Alabama
33.8
Increase
Decrease
Q1
Q1
2013 2014 20
30
40
50
60
70
Percent Mobile
58.3
Montgomery
58.8
0
10
20
30
40
50
60
The Center for Business and Economic Research would like to thank all Birmingham‐Hoover 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 Birmingham Business Alliance 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.
Produced in partnership with the