Birmingham-Hoover Metro Area Report

Alabama Business Confidence Index™

Third Quarter 2023

Birmingham–Hoover ABCI Grows but Remains Negative

Businesses confidence in the Birmingham–Hoover metro area grew by 3.2 points to reach 46.2 in the Q3 2023 ABCI survey. This index communicates mild confidence in a negative forecast for the quarter. Despite this being the fifth consecutive quarter that the index has been negative, metro confidence is trending upward as panelists forecast increased capital expenditures and a continuation of last quarter’s sales and statewide economic conditions. Only the industry hiring index decreased this quarter, becoming the metro’s lowest industry component index.

Index above 50 indicates positive outlook as compared to last quarter.
Index below 50 indicates negative outlook compared to last quarter.

Birmingham-Hoover Component Index Analysis

• Alabama Economy: Forecasts for the Alabama economy reached a neutral 50.0 in the Q3 2023 survey after growing 6.0 points from Q2 2023. This communicates expectations for a continuation of last quarter’s statewide economic conditions.
• US Economy: Despite the index growing by 4.4 points, two-thirds of Birmingham–Hoover business leaders are still forecasting a contraction in the U.S. economy, resulting in a very strongly negative index of 34.4 for Q3 2023.
• Industry Sales: Like the AL outlook, the metro’s industry sales index registered at neutral 50 this quarter after a 2.0-point increase from last quarter. Panelists were evenly split in their forecasts for an increase, decrease, and no change in their sales.
• Industry Profits: The Birmingham–Hoover profits index gained 7.0 points in the Q3 2023 survey to reach a very mildly negative 49.0.
• Industry Hiring: The metro’s hiring index dropped 7.3-points this quarter to reach a moderately negative 41.7. Only 12.5 percent of panelists expect to increase hiring this quarter, while twice as many expect to decrease compared to Q2 2023.
• Industry Capital Expenditures: Industry capital expenditures is Birmingham–Hoover’s highest industry component index this quarter with a mildly positive index of 52.1. This is 7.1-points above last quarter’s moderately negative index.

ABCI Birmingham-Hoover in Context

Birmingham–Hoover’s ABCI registered at a mildly negative 46.2 in the Q3 2023 survey. The metro’s ABCI was briefly negative in Q3 2020 at the start of the pandemic, but panelists’ confidence rebounded quickly and was positive for the following two years. In Q3 2022, the metro dipped below 50 and has remained negative since then. The metro’s negative outlook is strongly tied to business leaders’ forecasts for worse economic conditions for the country. The metro’s US economy index first registered as mildly negative in Q4 2021 but dropped to very strongly negative in Q3 2022 where it has remained since, exerting a strong downward pull on the metro’s ABCI.

Business confidence across metros varied in the Q3 2023 survey. For the second consecutive quarter, Huntsville was the only metro with a positive ABCI and positive forecasts for all industry component indexes. Tuscaloosa’s ABCI was mildly negative with positive forecasts for hiring and the AL economy. Montgomery and Birmingham–Hoover followed next with mostly negative component indexes but expectations for capital expenditure growth. Mobile had the lowest ABCI this quarter at a moderately negative 43.0.

The Center for Business and Economic Research would like to thank the Alabama business executives who completed the third quarter 2023 ABCI™ survey. This is the 87th consecutive quarter this report has been recorded, and it would not have been possible without your participation.
Be sure to log in during the September 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the fourth quarter of 2023.

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This report was produced in partnership between the Center for Business and Economic Research at the The University of Alabama’s Culverhouse College of Business and the Birmingham Business Alliance.

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