Birmingham‐Hoover Area Business Confidence Steady ABCI Birmingham‐Hoover slipped just 0.1 point to 53.2 on the first quarter 2014 survey. Assessment of the business environment and hiring prospects are weaker than last quarter, but indexes for industry sales, profits, and capital expenditures are stronger. Confidence is up 2.5 points from a year ago and has been steady in recent quarters. Birmingham‐Hoover area businesses should generally see stronger sales in the first quarter. The index is up 1.1 points to 56.3, with half of panelists expecting to maintain fourth quarter sales levels and a net 25 percent forecasting an increase. At 54.5, the profits index shows optimism—over 46 percent of firms anticipate no change and a net 17.8 percent expect profits to strengthen this quarter. Although an index of 49.6 indicates that job creation is not likely to pick up in the first quarter, the jobs picture should be stable, with 62.5 percent of panelists forecasting no change in hiring plans. Capital spending is looking more robust; the index is up 4.5 points to 56.7. Almost 61 percent see invest‐
ment levels flat and a net 21.5 percent plan an increase. Firms in professional, scientific, and technical services have the highest area industry ABCI at 66.2 this quarter, while readings in construction and financial activities indicate moderate improvement. Birmingham‐Hoover businesses in construction, manufacturing, and professional services are the most likely to increase hiring. Area wholesalers have a negative outlook on every industry indicator this quarter. ABCITM Birmingham‐Hoover 100
80
Alabama Birmingham‐
Hoover
ABCI 53.2
51.2
National Economy 48.2
47.8
Alabama Economy 54.0
53.8
Industry Sales 56.3
54.1
Industry Profits 54.5
52.3
Industry Hiring 49.6
49.6
Capital Expenditures 56.7
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. Birmingham‐Hoover Metro Area: Business Environment Expectations Q1 2014 compared to Q4 2013 Executives in the Birmingham‐Hoover area have a mildly negative view of the U.S. economy. The national economy index is down 1.8 points to 48.2 on the first quarter outlook. Although 3.3 points lower than last quarter, an Alabama index reading of 54.0 indicates moderate economic growth. 26.8
Better
70
Index
First Quarter 2014 Outlook National Economic Outlook 90
60
52.7
57.6
37.5
Remain the Same
52.8
52.7 54.4 53.3 53.2
49.7 50.7
35.7
Worse
50
0
40
10
20
30
40
50
60
60
Alabama Economic Outlook 30
20
Better
10
Remain the Same
0
30.4
55.4
14.3
Worse
Q1
Q2
Q3 Q4 Q1 Q2
Q3 Q4 Q1
2012 2013 2014
0
10
20
30
Percent 40
50
Birmingham‐Hoover Metro Area: Industry Performance Expectations Birmingham‐Hoover area business confidence held steady at 53.2 on the first quarter 2014 ABCI survey, two points above optimism statewide. All components of the Birmingham‐
Hoover ABCI, except hiring, are higher than their statewide readings. Expectations for hiring came in at an almost‐neutral 49.6 in both the metro area and the state. ABCI Birmingham‐Hoover in Context Q1 2014 compared to Q4 2013 Sales 60
37.5
Increase
55
50.0
No Change
50
12.5
Decrease
0
10
20
30
40
50
60
45
40
Profits 35
35.7
Increase
30
46.4
No Change
25
Q1
Q1
Q1
Q1
Q1
Q1
2007 2008 2009 2010 2011 2012
17.9
Decrease
0
10
20
30
40
50
60
Hiring Plans 17.9
Increase
62.5
No Change
19.6
Decrease
0
10
Alabama
Birmingham‐Hoover
20
30
40
50
60
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 continue to be dampened by the U.S. economy. Still, sales and profits should generally be better in the first quarter. While the Huntsville outlook remains negative, business sentiment elsewhere in the state is positive. ABCI by Metro Area Q1 2014 Alabama
30.4
60.7
0
10
20
30
40
50
60
53.2
Huntsville
8.9
Decrease
51.2
Birmingham‐Hoover
No Change
Capital Expenditures Increase
Q1
Q1
2013 2014 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 Birmingham‐Hoover 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 Birmingham Business Alliance 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