Alabama
Business
CULVERHOUSE COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Fourth Quarter 2003 / Volume 72, Number 4
In this issue:
Economic Outlook: 4th Quarter 2003
Ahmad Ijaz
3
Selected Economic Indicators
Ahmad Ijaz
7
Alabama Housing Affordability Index
Leonard Zumpano
8
Business Leaders Confidence Index:
2003 in Review
Carolyn Trent
10
THE UNIVERSITY OF
ALABAMA
B U S I N E S S
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
This report is also available in PDF format on the
Internet at
Alabama Business
http://cber.cba.ua.edu
The Center for Business and Economic Research has
available at this site downloadable data on various topics
including population, income, and employment.
Research briefs are also available.
Associate Dean for Research
and Technology
Carl Ferguson
Associate Director
Samuel Addy
Assistant Directors
Deborah Hamilton
Annette Jones Watters
Authors
Ahmad Ijaz
Carolyn Trent
Leonard Zumpano
Graphic Design
Sherry Lang
Addtional Contributors
Deborah Hamilton
Sunja Park
Mark Your Calendars!
January 2004
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The University of Alabama’s Center
for Business and Economic Research
will hold its 2004 Economic Outlook
Conference on January 15, 2004 in
Montgomery, Alabama.
For more information:
Phone: (205) 348-6191
Email: [email protected]
Alabama Business is a quarterly publication of the Center
for Business and Economic Research, Culverhouse
College of Commerce and Business Administration, The
University of Alabama.
Articles reflect the opinions of the authors, but not necessarily those of the staff of the Center, the faculty of
the Culverhouse College of Commerce, or the administrative officials of The University of Alabama.
All correspondence should be addressed to:
Editor, Alabama Business, Center for Business and
Economic Research, The University of Alabama, Box
870221, Tuscaloosa, Alabama 35487-0221.
For information on the Center for Business and
Economic Research, the Culverhouse College of
Commerce and Business Administration or The
University of Alabama:
http://cber.cba.ua.edu
http://www.cba.ua.edu
http://www.ua.edu
THE UNIVERSITY OF
ALABAMA
CENTER FOR BUSINESS &
ECONOMIC RESEARCH
Economic Outlook:
4th Quarter 2003
United States
Overview. After a slow start, the pace of the economic
recovery seems to be picking up in the second half of the
year, albeit without any rise in payroll employment. Since
November 2001, the official end date for the most recent
recession, the U.S. economy has experienced the weakest
job market in any postwar recovery period, including the
jobless recovery of 1990-91. Consumer spending remains
strong and business spending is beginning to show signs
of improvement. However, with second quarter productivity increasing by 6.8 percent and manufacturers’ capacity utilization at just 73 percent, it may take a while for significant and consistent gains in payroll employment to
occur. Other reasons for the jobless recovery include the
shift of labor-intensive service and manufacturing jobs
overseas and the excessive hiring growth of the late 1990s.
Furthermore, budget woes have impeded the ability of
state and local governments to hire and thus provide some
labor market stimulus. High fixed labor costs, particularly
rapidly escalating health care costs for current and retired
employees, are encouraging private businesses to hire
more temporary workers. Despite these challenges, rising
consumer and business spending, higher stock market valuations, and low inventory levels indicate that a broadbased and somewhat sustainable recovery is underway.
GDP. The U.S. economy grew at a 3.3 percent annual
rate in the second quarter, up from 1.4 percent in the first
quarter. This was fueled mainly by increases in consumer,
business, and government spending. Defense spending
rose 45.9 percent, the largest increase since the Korean
War in 1951. Expectations are for even higher GDP
growth in the third quarter. Consumer spending was relatively strong throughout the summer. Consumer sentiment declined slightly in September, mainly due to the
weak job market and slow growth in personal income, but
a 4.0 percent increase in spending is expected in the second half of the year. An almost eight percent rise in
spending on durable goods is forecasted. Residential construction, which remained strong throughout the summer,
may slow down in the fourth quarter.
Consumer spending grew 3.8 percent, compared to 2.0
percent in the first quarter; spending on durable and nondurable goods increased by 24.1 percent and 1.1 percent,
respectively. A most encouraging sign is that business
spending experienced the largest increase in nearly three
years. Fixed business spending grew 7.3 percent and
3
Manufacturing. Manufacturing is likely to try to squeeze
additional productivity from existing workers and increase
capacity utilization before hiring more workers. The manufacturing sector has lost jobs for 38 consecutive months
even though production picked up for eight months in
2002 and for four of the last five months. According to a
study published by Alliance Capital Management, this is a
worldwide phenomenon. From 1995 to 2002, 22 million
manufacturing jobs have been lost worldwide, mainly due
to improved technology and excess capacity. The last time
U.S. manufacturers added to payrolls was in July 2000.
expenditures on equipment and software grew 8.3 percent.
A nine percent rise in business spending is expected in the
second half of 2003, with spending on equipment and
software increasing by over 13 percent as businesses take
advantage of accelerated depreciation.
Employment. Payroll employment has declined by
approximately 1.4 million in the time since the recession
officially ended. Perhaps we are beginning to get some
good news. September jobs numbers are the most encouraging since last January. After six straight months of
declining payrolls, employment grew by 57,000 in
September, with the unemployment rate at 6.1 percent.
Manufacturing lost 29,000 jobs; that rate of loss was actually a much slower pace than in recent months.
Professional and business services added jobs, with temporary employment increasing for the fifth consecutive
month. Almost half of the 66,000 new jobs added by professional and business services were in temporary help
services. Temporary jobs have risen by about 147,000
since April.
The employment component of the Institute for Supply
Management’s nonmanufacturing survey has been above
50 in recent months, indicating an expansion in payrolls.
Chances are good for some employment gains. As business confidence in the current economic expansion grows
and profits improve, businesses will have to begin hiring
again. However, significant improvement in payrolls is
more likely to take place in 2004. Employment gains in
the fourth quarter of 2003 are expected to be mainly in
business and professional services, educational and health
services, and other service sectors of the economy, which—
unlike manufacturing—can easily rely on temporary workers. Payroll employment is expected to decline by 0.2 percent (about 300,000 jobs) for the year as a whole.
4
The positive note is that the Institute for Supply Management index was indicating a manufacturing expansion in
September. Production and new orders indexes were at
57.3 and 60.4, respectively. An index value of 50 or above
indicates expansion. Industries producing high-end goods
and housing-related consumer goods have experienced
strong demand due to a healthy housing market and
favorable interest rates. Although the passenger car market has declined somewhat, light truck and utility vehicle
production is up over six percent compared to the previous year. Telecommunications equipment production
remains one of the weakest industries within manufacturing due to excess capacity. Overall industrial production
is expected to improve this year, but excess capacity and
lack of pricing power will cause traditional manufacturing
industries to remain weak. Manufacturing payrolls and
capital investment will truly rebound only when the recovery is on solid footing.
Alabama
Employment. Like the U.S. economy, the state’s economy has had to contend with mounting job losses. From
September 2002 to September 2003, the state lost 24,100
jobs—10,800 goods producing and 13,300 service providing jobs. Service providing sectors account for almost 78
percent of the state’s economy. Excess capacity and
strong foreign competition continue to curtail the state’s
manufacturing sector job growth. Manufacturing lost
12,400 jobs in the most recent September-to-September
period. Manufacturing industries that had significant job
losses include textiles and apparel (2,900), primary and
fabricated metals industries (2,400), transportation equipment (1,500, but motor vehicles employment was
unchanged), computer and electronic product manufacturing (1,300), food manufacturing (1,200), and machinery
and electrical equipment, appliance, and component manufacturing (1,100). Wood product manufacturing gained
600 jobs.
All service sectors lost jobs, except financial activities
whose employment remained the same. Wholesale and
retail trade lost 1,500 jobs, primarily due to strong competition, pricing pressures from discount retailers, and excess
capacity built in the late 1990s that has yet to be worked
out. Other sectors that lost jobs are telecommunications
(1,000), professional and business services (1,900), educational and health services (1,800), leisure and hospitality
(900), and other services (1,300). Despite a recent pickup
in the economy, it is unlikely that the state will experience
any significant gains in payrolls.
Tax Revenues. For fiscal year (FY) 2002-2003, state tax
receipts increased by 0.9 percent to a little over $6.1 billion, an almost $57 million increase over the previous fiscal year. Individual income tax receipts increased by $57
million, or 2.4 percent, to about $2.5 billion. Corporate
income tax revenues fell almost 21.2 percent, or $64 million, to $240.1 million. Sales tax receipts of about $1.6
billion were up 1.7 percent, or $26 million, over the previous fiscal year.
5
Alabama Nonagricultural Employment
Change in Number of Jobs
September 2002 to
September 2003
In FY2003, the Alabama Education Trust Fund received a
little more than $4.2 billion, an increase of $117 million,
or 2.8 percent. General Fund receipts rose 14.8 percent
($170 million) to $1.31 billion. The state has a crisis with
respect to tax receipts and the tax structure in general.
Almost all states are facing crises with their budgets. The
decline in business spending, a lack of capital gains, and
spiraling health care costs have created budget woes everywhere. However, with improvements in business spending, state tax receipts for FY2004 are expected to be slightly higher than the fiscal year just ended.
Outlook. Auto production will remain one of the
strongest industries in the state economy. Expansion
plans, currently underway at Honda, Toyota, and
Mercedes plants, together with new manufacturing plants
being built by Hyundai and its suppliers, are expected to
yield significant job gains in 2004 and 2005. However, the
6
Total Nonagricultural
-24,100
Natural Resources and Mining
-100
Construction
1,700
Manufacturing
-12,400
Durable Goods Manufacturing
-6,800
Wood Products Manufacturing
600
Primary Metal Manufacturing
-1,300
Fabricated Metal Product Manufacturing
-1,100
Machinery Manufacturing
-800
Computers and Electronic Products Manufacturing
-1,300
Electrical Equipment, Appliance and Component Mfg. -300
Transportation Equipment Manufacturing
-1,500
Motor Vehicle Manufacturing
0
Furniture and Related Products
-100
Nondurable Goods Manufacturing
-5,600
Food Manufacturing
-1,200
Textile Mills
-1,200
Textile Product Mills
-1,000
Apparel Manufacturing
-700
Paper Manufacturing
-100
Chemical Manufacturing
-800
Plastics and Rubber Product Manufacturing
0
Trade, Transportation and Utilities
-2,700
Wholesale Trade
-700
Retail Trade
-800
Transportation, Warehousing and Utilities
-1,200
Information
-500
Telecommunications
-100
Financial Activity
0
Professional and Business Services
-1,900
Educational and Health Services
-1,800
Leisure and Hospitality
-900
Other Services
-1,300
Government
-4,200
Federal Government
-100
State Government
3,000
State Education
-1,900
Local Government
-1,100
Source: Alabama Department of Industrial Relations.
manufacturing sector as a whole will continue to lose jobs
because of technological innovations, substantial excess
capacity, and overseas competition. The gross state product is expected to end the year with an average annual
growth of 2.4 percent. Strong output growth in both the
third and fourth quarters will not increase payrolls significantly. On the other hand, next year holds high promise
for job gains.
Ahmad Ijaz
Selected Economic Indicators
United States
Gross Domestic Product (billions)
Percent Change
10-Year Treasury Bond Rate
3-Month Treasury Bill Rate
Consumer Price Index
Inflation Rate
Housing Starts (millions)
Percent Change
Total Employment (millions)
Percent Change
Unemployment Rate
Alabama
2002/Q2
2002/Q3
2002/Q4
2003/Q1
2003/Q2
2003/Q3
9,392.4
2.2
5.1
1.7
179.5
1.3
1.68
3.2
130.4
-1.3
5.8
9,485.6
3.3
4.3
1.6
180.5
1.6
1.70
6.4
130.2
-1.1
5.8
9,518.2
2.9
4.0
1.4
181.4
2.2
1.74
11.0
130.3
-0.4
5.9
9,552.0
2.0
3.9
1.2
183.1
2.9
1.74
1.2
130.2
-0.2
5.8
9,625.5
2.5
3.6
1.0
183.4
2.2
1.74
3.3
130.0
-0.3
6.2
9,734.2
2.6
4.3
0.9
184.7
2.3
1.78
4.8
129.9
-0.3
6.2
2002/Q2
2002/Q3
2002/Q4
2003/Q1
2003/Q2
1,886.9
-0.9
306.8
-5.1
1,897.4
-0.5
305.4
-3.7
1,870.1
0.0
299.7
-3.1
1,876.9
-0.8
296.2
-3.9
171.7
-2.2
171.1
-2.3
167.8
-2.9
166.2
-3.4
135.1
-8.6
134.3
-5.5
131.9
-3.2
130.0
-4.5
78.4
-5.2
77.6
-4.9
77.1
-2.7
77.5
-2.5
226.5
-0.2
5.9
23.8
40.8
1,542.1
6.2
678.0
8.9
395.0
3.9
231.8
-0.9
5.9
27.8
40.5
1,387.0
4.8
573.8
9.8
385.1
-1.2
226.0
-0.1
5.5
32.6
41.5
1,574.4
6.3
691.9
3.2
393.2
5.9
226.6
-0.7
5.6
Total Nonagricultural
Employment (thousands)
1,892.1
Percent Change
-1.4
Manufacturing Employment (thousands) 308.1
Percent Change
-6.1
Durable Goods Manufacturing
Employment (thousands)
172.0
Percent Change
-3.3
Nondurable Goods Manufacturing
Employment (thousands)
136.1
Percent Change
-9.4
Wholesale Trade
Employment (thousands)
79.4
Percent Change
-4.9
Retail Trade Employment
(thousands)
228.2
Percent Change
-0.1
Alabama Unemployment Rate
5.9
Initial Benefit Claims (thousands)
23.8
Manufacturing Weekly Hours
40.8
Total Tax Revenues (millions)
1,716.7
Percent Change
-0.8
Total Income Tax Revenues (millions)
833.7
Percent Change
0.2
Total Sales Tax Revenues (millions)
394.1
Percent Change
3.4
41.4
1,664.7
-3.0
791.4
-5.1
404.2
2.6
Note: All percent changes indicate change over same period of the previous year.
Source: U.S. Bureau of Labor Statistics, U.S. Department of Commerce, Alabama Department of Industrial Relations,
Alabama Department of Revenue, and Center for Business and Economic Research, The University of Alabama.
7
Housing Affordability
Index: 3rd Quarter
2003
Housing Affordability Falls for Second
Consecutive Quarter
The Alabama Housing Affordability Index (AHAI) fell 5.1
points in the third quarter to 189.7. Despite the fact that
this is the second consecutive fall in the AHAI, affordability levels remain near record highs in the state.
The statewide housing affordability index is calculated as
the ratio of the state’s actual median family income to the
income needed to purchase and finance the state’s median
priced home. An index number of 100 means that a family earning the state’s median income has just enough buying power to qualify for a mortgage loan on the state’s
median priced, single-family home. The higher the index
number, the more affordable the housing. An HAI of
189.7 means that Alabama families earning the statewide
median income of $46,794 had nearly twice the income
needed to qualify for a loan on the statewide median
priced home, which in the third quarter was priced at
$110,949. Stated differently, a family earning the
statewide median income could qualify for and purchase a
home valued at $210,470.
The decline in affordability is the result of both home
price appreciation and a recent climb in interest rates.
The median home price in the areas tracked by Alabama
Real Estate Research and Education Center (AREREC)
increased only 1.79 percent to $110,949 from the second
quarter. The average effective interest rate, however, rose
to 5.68 percent from 5.60 percent, according to the
Federal Housing Finance Board. The increase in interest
rates, coupled with the slight rise in median
prices, caused the statewide average monthly
payment to increase 2.59 percent, a higher
increase than the mild rise in home prices would
suggest.
The largest changes in housing affordability
occurred in Marshall and Walker Counties,
which both experienced substantial declines in
affordability; and Cullman County, which
reported a large increase in affordability from
the second quarter. Not surprisingly, these
counties also reported the largest changes in
median home prices from the second to the
third quarter.
The Housing Affordability Index (HAI) at the
national level also fell in the third quarter to
136.2, according to the National Association of
REALTORS® (NAR). The median home price
rose 4.87 percent to $177,133, while the median
family income rose less than one percent to
$53,641. The rise in interest rates had much the
same effect at the national level as it did at the
8
state level. While the median family
income remained relatively unchanged,
the 4.87 percent increase in the median
home price, coupled with the rise in
the average effective interest rate,
caused monthly payments to jump
6.07 percent in one quarter, which in
turn dragged down the HAI.
should continue to improve. On the
other hand, an improving economy will
also push long-term interest rates up, as
has been the case over the past several
months. Moderate increases in interest
rates may continue to pull affordability
and home sales down from recent
record highs, but 2003 still looks to be
a record setting year for the housing
market.
Despite the recent increase, historically
low interest rates continue to keep
housing affordable at the state and
national levels. Although rates have
begun to creep up, homebuyers have
not been too discouraged by the moderate decline in affordability. With a
rebounding economy, income levels
will rise and the employment situation
Leonard V. Zumpano, Director
Alabama Real Estate Research
and Education Center
Alabama Housing Affordability Index
3rd Quarter 2003 and 2nd Quarter 2003
Metro Area
Median
Income
Median
Price
Loan/Value
80%
Monthly
Payment
5.68%
Required
Income
HA Index
3rd Quarter
2003
HA Index
2nd Quarter
2003
Anniston
Auburn/Opelika
Birmingham
Dothan
Florence
Gadsden
Huntsville
Mobile*
Montgomery
Tuscaloosa
$44,400
51,300
54,200
46,700
44,700
42,900
59,700
47,200
51,300
50,600
$90,203
132,133
142,300
109,250
93,717
82,117
120,728
127,105
122,633
130,933
$72,163
105,707
113,840
87,400
74,973
65,693
96,582
101,684
98,107
104,747
$418
612
659
506
434
380
559
589
568
607
$5,015
7,346
7,911
6,074
5,210
4,565
6,712
7,067
6,818
7,279
$20,060
29,385
31,646
24,296
20,841
18,262
26,848
28,266
27,272
29,118
221.3
174.6
171.3
192.2
214.5
234.9
222.4
167.0
188.1
173.8
224.6
186.7
169.3
210.8
215.2
232.3
238.5
169.7
198.1
158.9
Baldwin County
Cullman County
Marshall County
Mobile County
Monroe County
Tallapoosa County
Walker County
$47,200
43,500
44,200
47,200
38,500
43,800
37,100
$140,409
87,133
86,733
113,800
88,317
166,800
84,125
$112,327
69,707
69,387
91,040
70,653
133,440
67,300
$651
404
402
527
409
773
390
$7,806
4,844
4,822
6,327
4,910
9,274
4,677
$31,225
19,377
19,288
25,308
19,641
37,094
18,708
151.2
224.5
229.2
186.5
196.0
118.1
198.3
150.7
199.4
258.3
194.1
191.3
128.7
230.5
Statewide Average
$46,794
$110,949
$88,759
$514
$6,168
$24,674
189.7
194.8
US Average
$53,641
$177,133
$141,707
$821
$9,848
$39,392
136.2
143.4
Annual
Payment
County Area
* The Mobile Metro Area, which is made up of Baldwin and Mobile counties, is atypical because of the higher concentration of
vacation properties located in Baldwin County. Because these vacation homes have much higher prices than owner-occupied residential properties, the HAI understates housing affordability for the Mobile Metro Area.
Source: The Alabama Real Estate Research and Education Center, in the Culverhouse College of Commerce and Business
Administration, at The University of Alabama and The Alabama Association of REALTORS.® National data supplied
by the Federal Housing Finance Board, and the Research Division of the National Association of REALTORS.®
9
BLCI: 2003 in Review
As the Alabama Business Leaders Confidence Index
(BLCI) survey entered its second year, the nation was
faced with a number of economic and geopolitical uncertainties. Possible war with Iraq was a primary concern
while continued stock market weakness and ongoing job
losses were others. The BLCI for first quarter 2003 came
in at 58, two points higher than the fourth quarter 2002
reading, as panelists felt optimistic that the U.S. economy
would improve during the quarter.
tax cuts and the child tax credit rebate, consumer spending
was a strong contributor, while residential construction
held up despite a jump in mortgage rates. Approaching
the fourth quarter, BLCI panelists looked forward to
increased federal spending on Iraq, rebounding business
investment, and a glimmer of hope that job creation will
join the recovery. The BLCI held at the third quarter level
of 61, however, as expectations for growth in the Alabama
economy dropped with the state tightening spending in
the wake of the defeat of the governor’s tax and accountability plan.
BLCI Indicators
The BLCI is a quarterly online survey of Alabama panelists who represent a broad spectrum of businesses across
the state. Seven economic indicators are measured in the
survey. All of the variables except interest rates are used in
computing the index. The following graphs present projected change on each indicator from the previous quarter
for the four quarters of 2003. While the survey captures
responses on a five-part scale, categories of strong increase
and moderate increase are combined into increase, while
moderate decrease and strong decrease are collapsed into
decrease on these annual graphs.
However, GDP growth in the first quarter languished at
the 1.4 percent seen in fourth quarter 2002. As Alabama
business leaders completed the second quarter survey during March 2003, war with Iraq commenced, but its duration and outcome were unknown. Job losses continued
and state and local government fiscal crises began to contribute to layoffs. With growth largely supported by residential construction and consumer spending, panelists’
confidence dropped. The second quarter BLCI of 56
reflected lowered expectations for growth in both the
national and state economies.
Economic and geopolitical issues were easing as panelists
recorded their expectations for the third quarter. Major
conflict with Iraq had ended, federal tax cuts were in
place, and financial market conditions had improved.
GDP growth increased to 3.3 percent for the second quarter. However, weak income growth and continuing job
losses remained risks to a sustainable recovery. The BLCI
rose five points to 61 for third quarter 2003, reflecting
optimism that economic growth would accelerate.
Both the U.S. and global economies gained momentum in
the third quarter of 2003, with U.S. GDP growth expected
to reach around 5.6 percent for the quarter. Boosted by
10
Economic and geopolitical concerns combined to constrain expectations for the U.S. economy during the first
two quarters of 2003. Negatives were at the highest level
of the year in the second quarter, when 22.4 percent of
panelists felt the nation’s economic activity was likely to
slip. By third quarter, Alabama business leaders seemed
confident that the U.S. economy was on track for stronger
growth, with 71.5 percent registering expectations for
increased economic activity. This optimistic outlook continued in the fourth quarter when positive expectations
reached a 2003 high of 73.3 percent, while negative sentiment fell to an annual low of 9.4 percent.
BLCI panelists were more cautious in their expectations
for the state’s economy throughout 2003. Although major
economic developments are on the horizon, Alabama continued to lose jobs, particularly in manufacturing and
trade. The state confronted ongoing fiscal crises and, with
the defeat of the governor’s tax and accountability plan,
was forced to cut spending sharply in the new budget year
that began in the fourth quarter. Alabama business leaders’ expectations peaked in third quarter 2003 with just
over half of panelists forecasting improvement, but fell in
the fourth to 46.4 percent anticipating an increase in economic activity and over 22 percent a decrease.
Consumer and federal government spending were primary
sources of economic strength throughout 2003. This
focus is reflected in sales expectations—across all four quarters of 2003, Alabama business leaders consistently felt
gains in industry sales would be the strongest contributor
to economic growth. The share of panelists predicting
sales increases in their industry rose steadily from 55.4 percent in the first quarter to 67 percent in the fourth. With
capital spending by businesses beginning to pick up also,
fears of a sales decline dropped from 15.5 percent of respondents on the second quarter survey to 11 percent in
the third and registered a 2003 low of 10.6 percent in the
fourth.
About two-thirds of Alabama business leaders expected
interest rates to hold steady during the first two quarters of
2003. The Federal Open Market Committee (FOMC)
agreed with this assessment, leaving the federal funds target rate at 1.25 percent. While over 62 percent still
expected interest rates to be unchanged in the third quarter, the 20.2 percent forecasting a decrease was the highest
of the year. And the FOMC lowered the rate to 1.0 percent in June. By fourth quarter, with overall economic
expectations looking up, the share of panelists feeling
interest rates could increase rose to 45.8 percent, the highest level in the two years of BLCI surveys.
Industry profit expectations generally strengthened across
2003, despite a dip in the second quarter as uncertainty
concerning the outcome of war with Iraq prevailed. By
the fourth quarter, 57.6 percent of Alabama business leaders forecast higher profits for their industry, up from just
46.6 percent in the second quarter. With the economy
showing signs of a stronger recovery in the second half of
the year, worries that profits would decline dropped—while
over 20 percent of panelists felt industry profits could
decline in the first half of 2003, negative sentiment fell to
an annual low of 13.6 percent by the fourth quarter.
11
Although still the weakest link in the recovery, the jobs
outlook improved during 2003. In all four quarters, the
consensus expectation among over half of Alabama panelists was that employment in their industry would be flat.
But the possibility of new jobs increased—while just 26.9
percent of respondents to the first quarter survey expected
their industry to add jobs, by fourth quarter, this share
had risen to 35.8 percent, the highest positive reading in
two years of the BLCI survey. And expectations among
Alabama business leaders that their industry would shed
jobs fell steadily across the year to a two-year low of 7.9
percent in fourth quarter 2003.
The BLCI is developed in partnership between Compass Bank and
the Center for Business and Economic Research. Complete results
can be found at www.blcindex.com/alabama/.
The University of Alabama
Center for Business and Economic Research
Box 870221
Tuscaloosa, Alabama 35487-0221
Address service requested.
With profit forecasts strengthening during 2003, firms
appeared to be gradually planning to increase capital
investment. While capital spending plans dropped
sharply from 44.2 percent anticipating an increase in the
first quarter to 37.6 percent in the second, they rebounded
to a two-year high of 47.9 percent expecting to increase
spending in the fourth quarter. Both accelerated depreciation and attractive prices were giving companies reason to
invest in software, computers, and other equipment. The
share of panelists feeling that their industry might curtail
capital spending rose slightly from a 2003 low of 10.1 percent in the third quarter to 11.8 percent in the fourth.
Carolyn Trent
Nonprofit Organization
U.S. Postage Paid
Tuscaloosa, AL 35401
Permit No. 16