Alabama Business Confidence Improves Slightly: Montgomery Is Most Optmistic, Huntsville Least

The Alabama Business Confidence Index™ (ABCI) is a forward-looking quarterly measure of business optimism across the state.  The first quarter 2012 survey was conducted online during the first two weeks in December, with 271 participants.  This is the 41st consecutive quarter that UA’s Center for Business and Economic Research has surveyed Alabama business executives about their expectations.


ABCI:  Business sentiment measured by UA’s Alabama Business Confidence Index™ (ABCI) moved back into positive territory at 50.8 for the first quarter of 2012, up 5.3 points from last quarter’s 45.5.  Panelists are generally feeling mildly optimistic about their prospects this quarter, with all four industry indicators at or above 50.  While economic conditions in the state should be a positive, the broader national economy is still expected to have a negative impact.  After seeing the pace of recovery slow early in 2011, Alabama business executives are decidedly more cautious than a year ago when the ABCI registered 55.0.

National Economic Outlook:  Alabama business executives are not ready to conclude that the U.S. economy is on solid ground.  Sentiment moved up 8.7 points on the first quarter 2012 survey, but at 46.5 indicates continuing weakness.  About 28 percent of panelists expect improvement, while 36.5 percent feel that economic conditions at the national level are likely to worsen this quarter.

Alabama Economic Outlook: The Alabama economy index rose 7.0 points to 52.0 this quarter.  About a third of panelists expect a better performance in first quarter 2012 than in the fourth quarter, while 24.4 percent think it could be worse.  Business executives continue to feel that the state’s economy will outperform the nation’s.  The Alabama index has been above 50 for five of the last six quarters.

Industry Sales:  Sales are expected to increase moderately in the first quarter of 2012.  The component index has indicated growth since first quarter 2010 and at 55.6 sales is the highest of the four industry indicators.  The index is up 5.0 points from the fourth quarter, with 45.8 percent of firms anticipating an increase in sales this quarter versus 22.1 percent a decrease.

Industry Profits:  About 36 percent of executives think profits in their industry will increase during the first quarter, while 33.2 percent expect no change from the fourth quarter.  The index of 50.2 indicates slight improvement overall.  Still, profits have the largest potential downside, as 31 percent of firms forecast a decrease.

Industry Hiring:  Job growth is not expected to pick up this quarter, with an index of 50 indicating no change from fourth quarter 2011 trends.  While there is a positive difference of 3.0 points between firms expecting to increase versus decrease hiring, the 3.7 percent forecasting a strong decrease cancels this out.  Most businesses (55.7 percent) expect to maintain current staffing levels in first quarter 2012, lending stability to the employment picture.

Industry Capital Expenditures:  Alabama is likely to see a very modest rise in capital spending overall this quarter; the component index of 50.6 is up 4.2 points from the fourth quarter.  Most firms (53.9 percent) expect expenditures to be unchanged, while 25.8 percent forecast an increase.

ABCI by Industry:  Alabama panelists in manufacturing and in the finance, insurance, and real estate and transportation, information, and utilities sectors are the most optimistic about the outlook for their industries in first quarter 2012 with ABCI readings in the 53 to 55 range.  Healthcare businesses are the most pessimistic at 42.5.

Metropolitan Areas:  Confidence in the Birmingham-Hoover metro rose 7.6 points to 52.7, while the Montgomery ABCI climbed 7.1 points to 54.3.  Panelists in both areas forecast at least modest improvement in sales, profits, hiring, and capital spending in the first quarter.  Business executives in Mobile expect the local economy to be relatively flat this quarter, with a reading of 49.6.  Sentiment is weakest in the Huntsville metro area, where a more negative outlook for the U.S. economy and expected declines in profits, hiring, and capital spending contributed to an index of 47.0.

 Firm Size:  Alabama firms with 100 or more employees are the most optimistic this quarter, with positive expectations for all indicators and an ABCI of 53.3.  Firms employing 20 to 99 are the most likely to increase hiring, although their ABCI is the lowest at 48.7.  The ABCI for businesses employing fewer than 20 was 49.2.

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About William Bruce

President, American Business Brokers Association / Business Broker and Accredited Business Intermediary assisting business buyers and sellers with the transfer of ownership since 1986 / Author: How to Buy a Business.
This entry was posted in Alabama's Economy, Gulf Coast Regional & National Economy, Mobile, Fairhope & Gulf Shores, Alabama and tagged , , , , , , , , , , . Bookmark the permalink.

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