Montgomery Metro Area Report

Alabama Business Confidence Index™

Third Quarter 2023

Montgomery Outlook Improves but Remains Negative in Q3 2023

Business leaders in Montgomery are anticipating worse economic conditions in Q3 2023 compared to Q2 2023 with a mildly negative ABCI of 46.6. This index is a 2.8-point increase from last quarter’s index. All of Montgomery’s component indexes either grew or remained the same from the Q2 2023 levels, though expectations for the US economy remain very strongly negative despite the increase. Expectations for the industry component indexes are mixed, with a mildly confident forecast for increased capital expenditure, expectations for a continuation of last quarter’s hiring levels, and negative outlook for sales and profits compared to the previous quarter.

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

Montgomery Component Index Analysis

• Alabama Economy: The Alabama index registered at a mildly negative 48.5 after increasing 3.5 points from Q2 2023.
• US Economy: Montgomery business leaders are still anticipating a contraction in the U.S. economy compared to the previous quarter. The index increased 3.0 points to 36.8, remaining strongly negative.
• Industry Sales: Industry sales are forecast to continue decreasing in Q3 2023 with a mildly negative index of 48.5. This is only a 0.3-point decrease from Q2 2023.
• Industry Profits: The Q3 2023 profits index increased 4.1 points from Q2 2023 to reach 44.1, indicating moderate expectations for decreased profits in Q3 2023.
• Industry Hiring: Montgomery’s hiring index remained at 50.0 this quarter as more than half of all metro panelists forecast a continuation of last quarter’s hiring levels.
• Industry Capital Expenditures: The metro’s capital expenditures index grew by 6.5 points to reach 51.5 for Q3 2023, making it Montgomery’s only positive industry component index for the quarter.

ABCI Montgomery in Context

Despite remaining negative, business confidence appears to be on the rise in Montgomery with the metro’s ABCI slowly ticking up for the last three quarters. After reaching an all-time high of 70.6 in Q3 2021, Montgomery’s ABCI began its descent, falling from very strongly positive to moderately positive, then mildly positive and mildly negative, finally registering as moderately negative in Q1 2023. Much of the initial downward pull can be attributed to the metro’s strongly negative outlook for the US economy, which first fell below 50 in Q1 2022 and has remained extremely pessimistic for the subsequent quarters. The industry component indexes dropped in Q1 2023, but have been increasing since then.

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 Montgomery Chamber of Commerce.

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