Alabama Business Confidence Index

Alabama Business Confidence Index™

Fourth Quarter 2025

Improved Confidence in Q4 2025

The Alabama Business Confidence Index (ABCI) registered at a moderately confident expansionary index of 55.1 in the Q4 2025 survey. All six component indexes increased this quarter to expansionary levels, indicating expectations for growth compared to last quarter, but the levels of confidence in those forecasts ranged from very mild (US economic outlook) to strong (sales). It is worth noting that the Q4 2025 ABCI data was collected from September 1 to 17, so the forecasts do not capture the federal government shutdown that began October 1.

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: Alabama business leaders are expecting conditions to improve in the statewide economy with a moderately confident index of 55.7. This is 3.5 points above last quarter’s Alabama outlook.
• US Economy: After two quarters of contractionary forecasts, the US economic index increased 1.6 points from Q3 2025 to register at a mildly confident expansionary index of 50.9.
• Industry Sales: Just over 50 percent of panelists are expecting their sales to increase compared to the Q3 levels, resulting in a strongly confident Q4 2025 sales index of 60.0. The sales index has been the highest ABCI component index for three consecutive quarters.
• Industry Profits: Panelists are anticipating increased profits this quarter with a moderately confident index of 55.5. This is a 5.6-point increase from Q3 2025’s neutral outlook.
• Industry Hiring: The statewide hiring index registered at a mildly confident expansionary 53.4 in the Q4 2025 survey. Most business leaders are expecting to continue hiring at the same rate as last quarter (55 percent), but 28 percent anticipate an increase in their hiring levels this quarter.
• Industry Capital Expenditures: Business leaders are feeling more confident forecasting increased capital expenditures this quarter. The index rose 4 points from last quarter’s mildly confident 51.3 to register at a moderately confident 55.3 for Q4 2025.

• Industry Sales: Like the overall industry indexes, eight of the nine industry groups had expansionary forecasts for sales. Only construction had a neutral sales index, with those panelists anticipating a continuation of Q3 2025’s levels of sales. In the Q3 2025 survey, only wholesale trade and construction had strongly confident expansionary industry sales outlooks, but this quarter, five industry groups are expecting their industry sales to increase with strong or very strong confidence, shown by their indexes that registered above 60.
• Industry Profits: Expectations for profits varied across industries this quarter with six expansionary indexes, two neutral forecasts, and one contractionary outlook. Panelists in transportation, information, and utilities and in professional, scientific, and technical services had the highest confidence that their profits would increase compared to Q3 2025 with indexes at or above 60. Business leaders in construction and retail trade are anticipating a continuation of last quarter’s profit levels in Q4 2025, and only manufacturing had a contractionary profits index, though it was only mildly confident.
• Industry Hiring: The industry hiring indexes were primarily neutral or expansionary in the Q4 2025 survey. Last quarter, three industries had moderately or mildly confident contractionary outlooks, one hiring index was neutral, and five were expansionary (two with moderate confidence, three with mild). This quarter, business leaders are forecasting increased hiring with more confidence. Only panelists in manufacturing are anticipating decreased hiring levels compared to Q3 2025, while two industries had neutral indexes of 50.0. The remaining six industries are forecasting increased hiring this quarter: two with mildly confident indexes of 53.0, and four with moderately confident indexes ranging from 55.0 to 58.3.
• Industry Capital Expenditures: Eight of the nine industry groups are forecasting an increase in their capital expenditures in Q4 2025. Confidence in those outlooks was fairly high, with six indexes registering at or above 55.0, indicating moderate to strong confidence in those expansionary forecasts. For the second consecutive quarter, panelists in retail trade are forecasting a decrease in their levels of capital spending, though their confidence decreased from strong (36.1) in Q3 2025 to mild (46.4) this quarter.

Comparable Confidence Across Firm Sizes

• Some quarters, there can be a large difference in business confidence levels by firm size, but in the Q4 2025 ABCI survey, firms of all sizes are feeling moderately confident about their expansionary forecasts. Business leaders in small firms, those with fewer than 20 employees, had slightly stronger confidence than their counterparts in Q4 2025 with an ABCI of 55.6, which is a 2.2-point increase from last quarter. All sizes of firms are forecasting higher sales with strong confidence, but small firms are expecting increased profits and capital expenditures with more confidence than their peers.
• The ABCI for large firms, those with 100 or more employees, rose 4.4 points to reach a moderately confident 55.0 this quarter. These business leaders had strong confidence in increasing sales, moderate confidence in improved conditions in the Alabama economy, and mildly confident expansionary outlooks for the remaining four component indexes.
• Business leaders in mid-sized firms, those with between 20 and 99 employees, had a Q4 2025 ABCI of 54.5. This is 5-points from their neutral Q3 2025 outlook. These panelists have a different outlook for the US economy than their counterparts in small and large firms: they are forecasting worse conditions in the US economy with mild confidence this quarter. Mid-sized firms’ hiring index, though mild, is slightly higher than their peers.

The Center for Business and Economic Research would like to thank the 132 Alabama business executives who completed the fourth quarter 2025 ABCI survey. This is the 96th consecutive quarter this report has been recorded, and it would not have been possible without your participation.

Be sure to log in during the December 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the first quarter of 2026.

Analysis provided by Susannah Robichaux, Socioeconomic Analyst, Center for Business and Economic Research, Culverhouse College of Business, The University of Alabama.