Montgomery Business Leaders Remain the State’s Most Optimistic
January 2016
By David Zaslawsky
When it comes to the most optimistic business leaders in the state, you don’t have to look very far. It’s Montgomery – again.
For the 14th time in the past 18 quarters (4½ years) and the seventh straight quarter, Montgomery business leaders are the most upbeat in the state, according to the latest Alabama Business Confidence Index. The quarterly survey is conducted by The University of Alabama Center for Business and Economic Research in the Culverhouse College of Commerce.
Montgomery business leaders had an overall index of 54.2 in the fourth-quarter survey of 2015, but Mobile is catching up with an index of 53.9. Birmingham was third at 51.4 and Huntsville business leaders had a negative outlook at 48.9.
All four of the state’s largest metro areas saw the index decline from the third quarter. Huntsville had the largest decline – 6.2 points from the third quarter while the Montgomery index fell 3.2 points. Birmingham’s index was down 1.7 points and Mobile’s index fell 0.4.
Montgomery was first in four of the six individual components – national economy (55.2), industry sales (56.4), industry hiring (54.7) and capital expenditures (52.9) - and ranked second in the other two – Alabama economy (52.9) and industry profits (52.9). It was in the industry hiring component that Montgomery enjoyed its largest margin – 3.7 points – over second place. The Montgomery business leaders were also 3.4 points more upbeat about the national economy and 2.7 points more optimistic about industry sales.
The overall ABCI for the fourth quarter declined 3.6 points from the previous quarter to 51.2, which is the lowest index since the first quarter of 2014. In the second quarter of 2015, the index was at 58.
The following is a component-by-component breakdown of the 2015 fourth-quarter ABCI:
National economy This component was the lowest of the six at 49.3, which shows contraction. It is the only component less than 50.0. The index fell 1.4 points from the third quarter and now has declined 7.2 points in two quarters. About one-quarter of the survey participants expected the U.S. economy to increase in the fourth quarter and close to half expected it to remain the same as the previous quarter.
ALABAMA ECONOMY The component fell to 52.0, a decline of 4.6 points from the third quarter. About half of the panelists expected the state economy to remain the same and nearly 30 percent expected the economy to improve in the fourth quarter.
INDUSTRY SALES This component had the second-largest decline of 5.0 points from the previous quarter to 53.3, but still has the highest index. It has dropped 8.2 points in two quarters.
INDUSTRY PROFITS The fourth-quarter index of 53.3 was 5.1 points less than the previous quarter.
INDUSTRY HIRING This component declined 3.0 points and is at 50.9, which is barely positive. About one-quarter of the respondents expected fourth-quarter hiring to increase while almost 60 percent expected it to be the same as the third quarter. The sectors expecting to increase hiring were construction, wholesale trade, professional, scientific and technical services. The sectors that anticipated a slowdown in hiring were manufacturing, transportation, information, utilities, retail trade and financial.
CAPITAL EXPENDITURES The component declined the least – 2.3 points – and is at 50.9. More than half of the respondents expected no increase in capital expenditures while about 25 percent expected an increase in the fourth quarter. The construction sector was the most upbeat about increased capital expenditures. Other optimistic sectors were professional, scientific and technical services. The most pessimistic sectors were manufacturing, wholesale trade and health care.
