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Alabama Businesses Cautiously Optimistic in First Quarter 2014

UA CBER’s Alabama Business Confidence Index™ (ABCI) registered a cautiously optimistic 51.2 on the first quarter 2014 survey.  Although down 0.7 points from the fourth quarter 2013 reading, sentiment is positive overall for the third consecutive quarter.  That’s a much better outlook than the pessimistic 45.4 recorded for first quarter 2013.

Concerns about the U.S. economy continue to constrain business expectations, particularly in the Huntsville metro area.  The national economy index is down 2.6 points to 47.8, indicating that growth will be weaker than in the fourth quarter.  At 53.8, the Alabama economic outlook is 6.0 points above the outlook for the U.S. economy.  Almost 80 percent of executives completing the first quarter survey expect the state’s economy to grow at the same or a stronger pace than last quarter.

Sales are forecasted to increase at about the same rate as in the fourth quarter.  The index value of 54.1 indicates generally moderate improvement in sales.  The profits outlook improved 0.8 points to 52.3. Almost 74 percent of panelists expect profits to be about the same or higher in first quarter 2014. Construction, manufacturing, and financial activities firms have the most optimistic outlooks for sales and profits trends.  Businesses in transportation, information, and utilities; retail trade; and healthcare are pessimistic about both sales and profits this quarter.

Although selected industries could post employment gains, Alabama is not likely to see job creation pick up overall during the first quarter.  The index slipped 1.2 points to 49.6, suggesting slightly weaker job prospects.  Close to 54 percent of firms forecast no change in hiring plans.  Most job gains will be in construction and manufacturing, with modest growth indicated for payrolls in retail trade and financial activities.

The capital expenditures index rose 1.5 points to a neutral 49.9. At that level, business investment statewide should be about the same as last quarter.  The Birmingham-Hoover and Montgomery metro areas saw significant improvement in capital spending expectations, with moderate increases forecast for the first quarter.  However, Huntsville’s index fell to a negative 38.8 as concerns about federal government spending continue to have an impact.

Businesses in construction, manufacturing, and financial activities have the most positive outlooks for first quarter 2014.  Industry sentiment in healthcare; trade; and transportation, information, and utilities is negative overall.

Mobile remains the most optimistic metro area with an ABCI of 56.2 and the strongest outlooks for sales, profits, and hiring.  Montgomery confidence is second at 55.4 and all indicators are positive.  ABCI Birmingham-Hoover came in at 53.2, with a flat hiring forecast, but moderate gains in other business measures. Huntsville panelists continue to have a negative outlook; area confidence registered 44.9.

The state’s small businesses with fewer than 20 employees eclipsed the larger firms as the most optimistic about their first quarter 2014 prospects and an ABCI of 54.5.  Confidence slipped to 50.9 among large firms employing 100 or more; still, this group is slightly optimistic on all industry indicators except hiring.  With an ABCI of 48.1, midsize businesses with 20 to 99 workers have a negative outlook on all performance indicators except sales. Only the small firms group has plans to increase hiring this quarter.

REPORT:  Results of the first quarter 2014 ABCI survey are available at  The survey, which is in its 13th year, was completed online December 1-15 by 227 Alabama business executives.


Ahmad Ijaz, Director of Forecasting, 205-348-2955,

Carolyn Trent, Socioeconomic Analyst, 205-348-3589, By UA CBER on February 10, 2014

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