Huntsville Area Business Confidence Negative but Steady Huntsville area business confidence slipped 0.9 points to 44.9 on the first quarter 2014 ABCI survey. Uncertainty and spending cutbacks at the national level are likely making firms more cautious about capital investment; both indexes declined more than three points. Although below 50, sales and hiring expectations held steady and the outlook for profits improved. The area sales index was about the same as in the fourth quarter at 47.3. About a third of panelists see industry sales unchanged this quarter, while a net 6.1 percent expect a decrease. Although up 2.3 points, the outlook for profits is negative at 45.8. Just 29.2 percent of panelists forecast an increase, while 41.5 percent see profits trending lower. Hiring prospects were down just 0.2 points to 46.9. While 52.3 percent of Huntsville area business executives expect hiring to be the same as last quarter, just 18.5 percent see the pace of hiring picking up. Huntsville’s capital spending index fell 3.2 points to 38.8. Firms seem to be postponing new investment until business picks up. A net 32.4 percent of area panelists expect to reduce capital spending in the first quarter. Curtailed federal spending continues to hurt the many professional, scientific, and technical service businesses that depend on government‐funded contracts—sentiment among this group fell back about eight points to 36.6. The area’s healthcare sector also registered a pessimistic 43.8. Firms in construction, financial activities, and manufacturing are optimistic about sales and profits, with flat hiring and lower capital spending forecasted. ABCITM Huntsville 100
Index
First Quarter 2014 Outlook Huntsville Alabama ABCI 44.9
51.2
National Economy 42.3
47.8
Alabama Economy 48.5
53.8
Industry Sales 47.3
54.1
Industry Profits 45.8
52.3
Industry Hiring 46.9
49.6
Capital Expenditures 38.8
49.9
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 Q1 2014 compared to Q4 2013 Huntsville panelists have a more negative view of the business environment this quarter. The national economy index fell 3.3 points to 42.3, with 47.7 percent of respondents expecting the economy to perform worse in the first quarter. Although not as weak, expectations for the Alabama economy dipped 0.8 points to 48.5. National Economic Outlook 90
80
Better
70
Remain the Same
47.0
40
21.5
30.8
47.7
Worse
55.0
60
50
48.3
44.3
40.4
0
45.7 45.8 44.9
35.6
10
20
30
40
50 29.2
Better
20
36.9
Remain the Same
10
33.8
Worse
0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2012 2013 2014
50 Alabama Economic Outlook 30
Q1
40
0
10
20
Percent 30
Huntsville Metro Area: ABCI Huntsville in Context Industry Performance Expectations At 44.9, Huntsville area business confidence is up more than nine points from its second quarter 2013 trough. However, ABCI Huntsville still came in 6.3 points lower than the statewide index for the first quarter of 2014, marking 12 consecutive quarters of below‐average sentiment. A negative business environment is affecting every aspect of Huntsville area business performance. Q1 2014 compared to Q4 2013 Sales 65
30.8
Increase
32.3
No Change
60
36.9
Decrease
0
10
20
55
30
40
50
60
Profits 50
45
Increase
29.2
40
No Change
29.2
35
Huntsville
41.5
Decrease
0
10
20
30
30
40
50
60
Hiring Plans 18.5
Increase
52.3
No Change
29.2
Decrease
0
10
20
Alabama
30
40
50
60
Q1
Q1
2007 2008
Q1
Q1
Q1
Q1
Q1
Q1
2009 2010 2011 2012 2013 2014 Panelists completed the first quarter 2014 ABCI survey during the first two weeks of December, when a possible federal budget agreement showed promise, but was not certain. The general feeling was that business prospects would still be dampened by the U.S. economy. However, sales and profits should generally improve in the first quarter. While the Huntsville outlook remains negative, business sentiment elsewhere in the state is positive. ABCI by Metro Area Q1 2014 Capital Expenditures Alabama
13.8
Increase
Birmingham‐Hoover
40.0
No Change
10
20
30
53.2
Huntsville
46.2
Decrease
0
51.2
40
50
60
44.9
Mobile
56.2
Montgomery
55.4
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 first quarter 2014 ABCI survey during the first two weeks of December. We look forward to a continuing partnership with the Huntsville Chamber of Commerce and encourage you to return for the second quarter 2014 survey March 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