Montgomery Metro Area Report

Alabama Business Confidence Index™

Third Quarter 2022

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Neutral and Negative Forecasts as Economic Uncertainty Increases

For the first time since 2019, Montgomery’s ABCI registered at a negative index in the Q3 2022 survey. The metro’s ABCI registered at a mildly negative 45.7 this quarter, down 5.6 points from Q2 2022’s mildly positive index of 51.3. Panelists were fairly evenly divided in their positive and negative forecasts for the industry component indexes, resulting in mostly neutral numbers around 50. However, the majority of Montgomery business leaders are forecasting worse economic conditions in the coming quarter: over 55 percent of panelists are anticipating worse statewide conditions and over 70 are expecting worse U.S. conditions than in Q2 2022.

Third Quarter 2022 Outlook

Montgomery Statewide
ABCI 45.7 47.3
Alabama Economy 39.8 41.1
US Economy 29.6 29.3
Industry Sales 50.9 55.0
Industry Profits 50.9 49.0
Industry Hiring 51.9 56.6
Industry Capital Expenditures 50.9 52.9

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 metro’s economic index for Alabama is strongly negative this quarter at 39.8. This is 9.1 points below Q2 2022’s index and indicates expectations for a contraction in the state’s economy compared to the previous quarter.
  • US Economy: This quarter, Montgomery’s business leaders continue to have a very strongly negative outlook on the U.S. economy with an index of 29.6, which is only 5.2 points below Q2 2022’s index. This is the third quarter that this index has been negative, indicating sustained pessimism about the country’s economic conditions.
  • Industry Sales: Metro business leaders are forecasting a continuation of last quarter’s sales conditions with a neutral index of 50.9, after a 4.5-point decrease from Q2 2022.
  • Industry Profits: Area business leaders were almost equally divided in their forecasts for profits this quarter, ultimately leading to a neutral index of 50.9 for Q3 2022, only 3.4 points below last quarter’s index.
  • Industry Hiring: Industry hiring’s index is mildly positive this quarter at 51.9 after a 10.1-point decrease from Q2 2022. Though it is the metro’s highest index this quarter, only 25.9 percent of panelists expect to increase hiring in the coming quarter and most expect to continue at the same pace as the previous quarter.
  • Industry Capital Expenditures: The metro’s capital spending index decreased 1.3 points to register at a neutral 50.9.

 

Montgomery Response Breakdown

Historical Montgomery ABCI™ and Industry Component Indexes

Historical Montgomery ABCI™ and Economic Outlook Component Indexes

ABCI Montgomery in Context

In the Q3 2022 ABCI, Montgomery business leaders are forecasting a contraction for the first time since Q3 2019 with a mildly negative ABCI of 45.7. When the impact of the \textsc{covid}-19 pandemic was first captured in the ABCI survey in Q3 2020, Montgomery’s business confidence dropped to a neutral ABCI for a quarter before recovering strongly. The metro’s ABCIs were strongly confident for Q4 2020 through Q3 2021 with an average index of 63.6, but with the rise of the Delta and Omicron variants, panelists became much more conservative with their forecasts for the last year. This quarter’s negative forecast is likely in response to obstacles that are the result of the lasting effects of the pandemic on the local workforce, prolonged difficulties with the global supply chain, and international conflict.

Business confidence decreased across Alabama in the Q3 2022 ABCI with negative forecasts for all metro areas but Huntsville. Huntsville was the only metro to have positive outlooks for all of its industry indexes but was aligned with the rest of the state in their strongly negative forecasts for the U.S. and Alabama economies. Birmingham-Hoover had a mildly negative ABCI (46.5) as did Mobile (46.4) and Montgomery (45.7), and Tuscaloosa had a moderately negative index of 44.8 for Q3 2022.

ABCI™ by Metro Area

Montgomery ABCI™ Compared to Statewide ABCI™

 

The Center for Business and Economic Research would like to thank the Alabama business executives who completed the third quarter 2022 ABCI™ survey. This is the 83rd 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 2022.

 

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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.

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