The Alabama Business Confidence Index™ (ABCI) came in at an optimistic 57.4 on the first quarter 2015 survey. That’s 3.2 points higher than last quarter and 6.2 points above the ABCI of 51.2 recorded a year ago. All component indexes increased this quarter, with the strongest gains in expectations for the U.S. economy, sales, and hiring.
The national economy index jumped 4.8 points to 56.4, the most optimistic outlook for U.S. economic growth since the second quarter of 2006 and a strong turnaround from the negative forecast of 47.8 a year ago. Almost 42 percent of the state’s business executives expect the U.S. economy to expand at a faster pace than in the fourth quarter and another 39.6 percent think growth will be about the same.
Business executives expect Alabama’s economy to see solid gains in the first quarter of 2015. At 57.4, the index is up one point from last quarter and up 3.6 points compared to a year ago. Almost 86 percent of panelists anticipate growth at the same or a higher rate than in the fourth quarter.
The sales index component of the ABCI rose 4.0 points to a robust 60.6. About 55 percent of panelists expect sales in their industry to increase compared to fourth quarter levels, while just 14.5 percent forecast a decrease. Every industry anticipates at least a moderate gain; sales growth should be strongest in manufacturing, wholesale trade, financial activities, and professional services.
Profits are likely to rise in all industries except healthcare and retail trade during the first quarter. The index value of 57.8 is 3.4 points above its fourth quarter reading. Over 81 percent of respondents expect profit trends to be the same or better than last quarter.
The state’s business executives are signaling solid job gains this quarter. The hiring index rose 3.8 points to 56.3 with 36.5 percent planning to increase the pace and 48.5 percent expecting job growth at about the same level as last quarter. All industries except retail trade should see a pickup in hiring, with professional services posting the largest gain.
Capital spending is expected to grow statewide in the first quarter of 2015; the index rose 2.2 points to 55.9. A third of panelists plan to increase investment, while over 54 percent anticipate spending at about the same level as last quarter. All industries could see at least modest gains, with the largest increases in manufacturing and wholesale trade.
Firms in manufacturing, wholesale trade, and financial activities are the most optimistic this quarter, with ABCI readings of 60 or above. Professional, scientific, and technical services businesses also have very strong outlooks for sales and hiring growth.
ABCI Montgomery edged up 0.7 points to 59.4, coming in on top among the large metro areas. A much weaker hiring outlook contributed to a slight decline in Mobile’s ABCI to 58.2. All industry indicators showed moderate to strong gains in the Birmingham-Hoover and Huntsville metros. ABCI Birmingham-Hoover rose 4.1 points to 58.1, while Huntsville’s index returned to positive territory, up 5.2 points to 54.9.
Businesses of all sizes are feeling positive about their first quarter prospects. Every indicator shows at least moderate optimism for each of the three groups categorized by number of employees. Firms with 100 or more employees have the highest ABCI at 59.0; the reading for both midsize and small businesses is 56.4.
REPORT: Results of the first quarter 2015 ABCI survey are available at http://cber.cba.ua.edu/abci. The survey, which is in its 14th year, was completed online December 1-15 by 227 Alabama business executives.
Ahmad Ijaz, Director of Forecasting, 205-348-2955, firstname.lastname@example.org
Viktoria Riiman, Research Associate, 205-348-3757, email@example.com
February 2, 2015