Alabama Business Confidence Index
Alabama Business Confidence Index™
Second Quarter 2025
Download the Full ReportDecreased Business Confidence in Q2
The Alabama Business Confidence Index (ABCI) registered at 51.1 in the Q2 2025 survey, communicating mild confidence in an expansionary forecast. This is 9.9 points below last quarter’s strongly confident ABCI of 61.0. The Q1 2025 ABCI was so high in part due to strongly confident forecasts for the US and Alabama economies, but expectations for overall economic conditions returned to mildly contractionary levels in the Q2 2025 survey. Panelists are continuing to anticipate industry growth in Q2 2025; however, confidence in those expansionary forecasts is lower than it was in Q1 2025.
Second Quarter 2025 Outlook
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Index above 50 indicates positive outlook as compared to last quarter.
Index below 50 indicates negative outlook compared to last quarter.
Statewide Component Index Analysis
- Alabama Economy: The Q2 2025 index for the Alabama economy decreased 14.4 points from the strongly expansionary outlook in Q1 2025 to register at a mildly confident contractionary 49.2.
- US Economy: The US economic outlook was also mildly contractionary this quarter at 47.1 after decreasing 16.6 points from Q1 2025’s strongly expansionary forecast. There are still 35 percent of panelists anticipating improved economic conditions nationally compared to last quarter, but over 42 percent of business leaders are expecting worse conditions.
- Industry Sales: Despite a 6.5-point decrease from the Q1 2025 sales index, business leaders throughout the state are still expecting industry sales to increase in Q2 2025 with a moderately confident index of 56.2.
- Industry Profits: The industry profits index decreased 6.7 points to reach 50.9 for Q2 2025, signaling mild confidence in forecasting increased levels of profits compared to last quarter.
- Industry Hiring: After decreasing 7.7 points from last quarter, the hiring index (50.7) registered as technically expansionary but very close to the neutral index in the Q2 2025 survey.
- Industry Capital Expenditures: Overall, business leaders throughout the state are still forecasting increased levels of capital expenditures in Q2 2025, though with a mildly confident index of 52.2. This is 7.6 points below the Q1 2025 index.
Statewide Response Breakdown
Statewide Response BreakdownParticipants’ responses reported as percentages |
| Much Worse | Somewhat Worse | No Change | Somewhat Better | Much Better | |
|---|---|---|---|---|---|
| Alabama Economy | 4.2 | 31.6 | 30.5 | 30.5 | 3.2 |
| US Economy | 9.5 | 32.6 | 23.2 | 29.5 | 5.3 |
| Industry Sales | 3.2 | 21.6 | 27.4 | 43.2 | 4.7 |
| Industry Profits | 3.2 | 29.5 | 30.0 | 35.3 | 2.1 |
| Industry Hiring | 4.2 | 20.0 | 46.3 | 27.9 | 1.6 |
| Industry Capital Expenditures | 3.7 | 22.6 | 39.5 | 29.5 | 4.7 |
Historical ABCI™ and Industry Component Indexes
Historical ABCI™ and Economic Outlook Component Indexes
CBER’s Forecast for Alabama
The Center for Business and Economic Research is forecasting a 1.6-percent increase in Alabama GDP for 2025, a decrease from 2024’s estimated growth rate of 3.0 percent. Alabama employment in 2025 is expected to grow by 1.4 percent, which is below 2024’s 2.0 percent. CBER anticipates that the state’s total tax receipts will grow by 1.0 percent this year, a slower rate than the 2.7-percent increase measured in 2024.
Decreased Confidence across Metros
Panelists in Mobile had the highest metro ABCI this quarter at 54.4, with more confidence in their forecasts for increased sales, profits, and hiring than the other metro areas. The Birmingham–Hoover ABCI was also expansionary with a mildly confident index of 51.9 as panelists forecast increased sales with moderate confidence. The ABCIs for Huntsville, Tuscaloosa, and Montgomery were all below 50, as business leaders forecast worse economic conditions in both the statewide and national economies and the contraction of at least one of their industry indexes. The Q2 2025 hiring index was mildly contractionary in Huntsville; Tuscaloosa is forecasting decreased profits and hiring this quarter; and Montgomery has a contractionary profits index and neutral outlooks for sales and hiring.
ABCI by Metro Area
Metropolitan Statistical Area (MSA): Second Quarter 2025 Outlook |
| Statewide | Birmingham–Hoover | Huntsville | Mobile | Montgomery | Tuscaloosa | |
|---|---|---|---|---|---|---|
| ABCI | 51.1 | 51.9 | 49.5 | 54.4 | 48.3 | 48.7 |
| Alabama Economy | 49.2 | 50.8 | 47.5 | 51.4 | 47.1 | 46.2 |
| US Economy | 47.1 | 48.4 | 44.4 | 51.4 | 44.1 | 46.2 |
| Industry Sales | 56.2 | 58.1 | 54.2 | 62.5 | 50.0 | 53.8 |
| Industry Profits | 50.9 | 50.0 | 51.1 | 55.6 | 47.1 | 45.5 |
| Industry Hiring | 50.7 | 50.0 | 48.9 | 54.2 | 50.0 | 49.4 |
| Industry Capital Expenditures | 52.2 | 54.0 | 50.7 | 51.4 | 51.5 | 51.3 |
Decreased Confidence Leads to Mixed Industry Forecasts for Q2 2025
Most industries’ indexes decreased from Q1 to Q2 2025, though seven of the nine industry groupings are continuing to forecast growth this quarter. The industry index only includes panelists’ forecasts for their own industry sales, profits, hiring, and capital expenditures, thus offering unique insight into panelists’ expectations for their specific industries. Though seven industries had overall expansionary forecasts, their expectations for their individual component indexes were quite varied. Transportation, information, and utilities had the highest industry index at 61.6 after increasing 5.4 points from Q1 2025, but their hiring index was only mildly confident in contrast with their very strong confidence in increased sales and profits. Construction had very high sales and capital expenditures indexes but a neutral profits outlook. Panelists in professional, scientific, and technical services were the only industry to have contractionary forecasts for all four component indexes, with the most confident expectations for decreased hiring and capital expenditures.
Industry Component Index: Second Quarter 2025 Outlook |
| Industry Index | Change from Q1 | Sales | Profits | Hiring | Capital Expenditures | |
|---|---|---|---|---|---|---|
| Transportation/Information/Utilities | 61.6 | 5.4 | 67.9 | 67.9 | 53.6 | 57.1 |
| Construction | 59.9 | -4.7 | 68.8 | 50.0 | 56.2 | 64.6 |
| Manufacturing | 58.1 | -4.3 | 63.0 | 56.5 | 58.7 | 54.3 |
| Wholesale Trade | 55.0 | 0.3 | 70.0 | 60.0 | 45.0 | 45.0 |
| Healthcare/Social Assistance Services | 54.9 | -4.4 | 57.1 | 51.8 | 55.4 | 55.4 |
| All Other Services | 53.2 | -3.2 | 55.8 | 49.4 | 49.4 | 58.3 |
| Statewide | 52.5 | -7.1 | 56.2 | 50.9 | 50.7 | 52.2 |
| Finance/Insurance/Real Estate | 52.1 | -7.3 | 55.9 | 52.0 | 51.3 | 49.3 |
| Retail Trade | 47.3 | -0.9 | 46.4 | 39.3 | 53.6 | 50.0 |
| Professional/Scientific/Technical Services | 45.0 | -19.5 | 47.6 | 46.3 | 42.1 | 43.9 |
The Industry Index only includes panelists’ forecasts for their industry sales, profits, hiring, and capital expenditure, and does not include the Alabama or US outlooks.
- Industry Sales: Like in Q1 2025, most industry groups are anticipating increased sales compared to last quarter with moderate to very strong confidence. This is the second consecutive quarter that construction has had a very strongly confident sales index, indicating sustained expectations for increased sales from those panelists. The sales index for professional, scientific, and technical services dropped 21.2 points from a strongly confident expansionary index of 68.8 in Q1 to reach a mildly contractionary 47.6 this quarter, signaling overall expectations for decreased sales compared to last quarter.
- Industry Profits: Panelists across industry groups had very different outlooks for their Q2 2025 profits. On the upper end, three industry groups had moderately or strongly confident expansionary forecasts with indexes above 55, and two industries expressed mild confidence in anticipating increased profits compared to Q1 2025 with indexes around 52. Three industries had a contractionary profits outlook: “all other services” and professional, scientific, and technical services expect profits to decrease with mild confidence while panelists in retail trade have strong confidence in their contractionary forecast.
- Industry Hiring: In the Q1 2025 survey, the industry hiring indexes ranged from a neutral 50 to strongly expansionary 64.6, with seven of the nine industry groups forecasting increased hiring. This quarter, confidence across industries has decreased, resulting in three contractionary hiring indexes and six less confident expansionary indexes. Panelists in manufacturing had the highest index at 58.7, a moderately confident forecast for increased hiring in Q2 2025. Business leaders in professional, scientific, and technical services had the lowest index at 42.1, indicating moderately confident expectations for decreased hiring levels compared to last quarter.
- Industry Capital Expenditures: Like hiring, overall expectations for capital expenditures this quarter are much more subdued than they were in Q1 2025: only five of the nine industry groups anticipates an increase in their capital spending this quarter, with one neutral outlook and three contractionary forecasts. The exception is construction, where panelists had a strongly confident expansionary forecast (64.6) for the second consecutive quarter.
Firm Size: Second Quarter 2025 Outlook |
| Number of Employees | |||
|---|---|---|---|
| 0 to 19 | 20 to 99 | 100+ | |
| ABCI | 51.0 | 47.8 | 54.9 |
| Alabama Economy | 48.3 | 47.8 | 52.6 |
| US Economy | 45.9 | 45.5 | 51.0 |
| Industry Sales | 55.8 | 53.1 | 60.4 |
| Industry Profits | 52.0 | 46.0 | 54.7 |
| Industry Hiring | 49.1 | 49.1 | 55.2 |
| Industry Capital Expenditures | 54.9 | 45.5 | 55.2 |
Large Firms Forecasting Growth with More Confidence than Peers
- Business confidence across firm sizes was uniformly high last quarter with ABCIs around 60. In the Q2 2025 survey, the ABCIs for all three firm sizes decreased but by different magnitudes, such that panelists in large firms, those with 100 or more employees, had a moderately expansionary ABCI of 54.9 (down 5.9 points from Q1 2025); small firms, those with fewer than 20 employees, had a mildly expansionary 51.0 (a decrease of 10.9 points); and mid-sized firms, those with between 20 to 99 employees, had a mildly contractionary outlook of 47.8 (an 11.7-point decrease).
- Broken down by ABCI components, panelists in large firms were more optimistic than their peers and had expansionary forecasts in all six categories. Only large firms are expecting to increase hiring in Q2 2025 and to see improved conditions in the US and Alabama economies compared to last quarter.
- The only component index that was expansionary for all three firm sizes was sales, though large firms were strongly confident in their forecasts for growth compared to the moderate confidence from small firms and mild confidence from mid-sized firms. Panelists in mid-sized firms had contractionary forecasts for their remaining five component indexes.
The Center for Business and Economic Research would like to thank the 190 Alabama business executives who completed the second quarter 2025 ABCI survey. This is the 94th consecutive quarter this report has been recorded, and it would not have been possible without your participation.
Be sure to log in during the June 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the third quarter of 2025.
Analysis provided by Susannah Robichaux, Socioeconomic Analyst, Center for Business and Economic Research, Culverhouse College of Business, The University of Alabama.