Alabama Business Confidence Index
Alabama Business Confidence Index™
First Quarter 2025
Download the Full ReportBusiness Confidence Rebounds in Q1
The Alabama Business Confidence Index (ABCI) registered at 61.0 in the Q1 2025 survey, communicating Alabama business leaders’ strong confidence in an expansionary forecast. This is 11.5 points above last quarter’s neutral ABCI of 49.5 and the highest that the index has been since Q3 2021. Moving into Q1 2025, all of the component indexes increased to reach moderately to strongly expansionary levels. The US economic outlook had the most dramatic upswing, growing by 18.4 points from Q4 2024’s mildly contractionary forecast.
First 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: Business leaders throughout the state are forecasting improved conditions in the Alabama economy in Q1 2025 with a strong confident index of 63.6. This is 13.0 points higher than the Q4 2024 statewide index.
- US Economy: The Q1 2025 index for the US economy increased a whopping 18.4 points from the mildly expansionary outlook in Q1 2025 to register at a strongly expansionary 63.7, with almost 60 percent of panelists expecting an improvement of last quarter’s economic conditions.
- Industry Sales: The industry sales index registered at a strongly confident expansionary index of 62.7 this quarter after increasing 9.1 points from Q4 2024.
- Industry Profits: Overall, business leaders throughout the state are expecting industry profits to increase in Q1 2025 compared to the previous quarter with a moderately confident index of 57.6 after a 7.3-point increase.
- Industry Hiring: After a mildly contractionary outlook in Q4 2024, the industry hiring index rebounded 10.6 points to 58.4, indicating moderate confidence in forecasts for increased hiring this quarter.
- Industry Capital Expenditures: The Q1 2025 capital expenditures index registered as expansionary with a strongly confident index of 59.8 after increasing 10.4 points from last quarter.
Statewide Response Breakdown
Statewide Response BreakdownParticipants’ responses reported as percentages |
| Much Worse | Somewhat Worse | No Change | Somewhat Better | Much Better | |
|---|---|---|---|---|---|
| Alabama Economy | 0.0 | 7.3 | 37.2 | 49.4 | 6.1 |
| US Economy | 0.0 | 12.8 | 27.4 | 51.8 | 7.9 |
| Industry Sales | 0.6 | 12.2 | 29.9 | 50.6 | 6.7 |
| Industry Profits | 0.6 | 16.5 | 39.0 | 39.6 | 4.3 |
| Industry Hiring | 0.0 | 7.3 | 54.3 | 36.0 | 2.4 |
| Industry Capital Expenditures | 4.9 | 6.7 | 40.9 | 39.6 | 7.9 |
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 2.0-percent increase in Alabama GDP for 2025, a slight decrease from 2024’s estimated growth rate of 2.5 percent. Alabama employment in 2025 is expected to grow by 1.7 percent, which is slightly below 2024’s 2.0 percent. CBER anticipates that the state’s total tax receipts will grow by 1.5 percent this year, a slower rate than the 2.7-percent increase measured in 2024.
Increased Confidence across Metros
Panelists in Montgomery had the highest metro ABCI this quarter at 63.3, with strongly confident expansionary forecasts for all of the component indexes. With an ABCI of 61.4, Huntsville had the highest industry sales and hiring indexes of the four participating metros. Birmingham-Hoover followed closely with a Q1 2025 ABCI of 60.6 and notably high expectations for growth in capital spending compared to last quarter. Business leaders in Tuscaloosa expressed moderate confidence in their expansionary forecast with moderate to strong values for all their component indexes. There was not enough participation to include Mobile’s outlook this quarter.
ABCI by Metro Area
Metropolitan Statistical Area (MSA): First Quarter 2025 Outlook |
| Statewide | Birmingham-Hoover | Huntsville | Mobile | Montgomery | Tuscaloosa | |
|---|---|---|---|---|---|---|
| ABCI | 61.0 | 60.6 | 61.4 | — | 63.3 | 58.6 |
| Alabama Economy | 63.6 | 60.0 | 63.1 | — | 70.0 | 63.1 |
| US Economy | 63.7 | 65.0 | 60.6 | — | 65.0 | 63.1 |
| Industry Sales | 62.7 | 62.5 | 63.6 | — | 63.3 | 60.6 |
| Industry Profits | 57.6 | 57.5 | 58.5 | — | 60.0 | 54.4 |
| Industry Hiring | 58.4 | 55.8 | 61.4 | — | 60.0 | 55.0 |
| Industry Capital Expenditures | 59.8 | 62.5 | 61.0 | — | 61.7 | 55.6 |
Most Industries Forecast Expansion in Q1 2025 Compared to Q4 2024
Overall industry indexes increased across all of the industry groupings in the Q1 ABCI survey. 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. In the Q1 2025 survey, eight of the nine industry groups forecasted growth compared to the previous quarter, with moderate to very strong confidence. This is a significant increase in confidence, since only two of the nine industry groups (finance, insurance, and real estate and “all other services”) had expansionary industry indexes last quarter. In Q1 2025, three groups had industry indexes at or above 60, indicating strong confidence in their expansionary forecast; five groups had moderately confident indexes (at or above 50). Retail trade was the only industry with a contractionary ABCI at 48.2, as the industry’s panelists forecast decreased capital expenditures with strong confidence (39.3). Aside from retail trade’s capital expenditures index, all of the other component indexes were either neutral (50), indicating expectations for a continuation of last quarter’s levels, or expansionary (greater than 51).
Industry Component Index: First Quarter 2025 Outlook |
| Industry Index | Change from Q4 | Sales | Profits | Hiring | Capital Expenditures | |
|---|---|---|---|---|---|---|
| Construction | 64.6 | 14.6 | 68.8 | 60.4 | 64.6 | 64.6 |
| Professional/Scientific/Technical Services | 64.5 | 15.8 | 68.8 | 64.1 | 63.3 | 61.7 |
| Manufacturing | 62.5 | 13.5 | 63.3 | 63.3 | 60.0 | 63.3 |
| Statewide | 59.6 | 9.4 | 62.7 | 57.6 | 58.4 | 59.8 |
| Finance/Insurance/Real Estate | 59.4 | 6.6 | 64.9 | 58.1 | 54.7 | 60.1 |
| Healthcare/Social Assistance Services | 59.4 | 12.0 | 66.7 | 52.1 | 62.5 | 56.2 |
| All Other Services | 56.4 | 3.2 | 56.7 | 53.0 | 56.7 | 59.1 |
| Transportation/Information/Utilities | 56.2 | 13.8 | 58.3 | 50.0 | 50.0 | 66.7 |
| Wholesale Trade | 54.7 | 10.9 | 50.0 | 56.2 | 50.0 | 62.5 |
| Retail Trade | 48.2 | 2.6 | 50.0 | 50.0 | 53.6 | 39.3 |
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. “All other services” includes management of companies and enterprises; education services; arts, entertainment, and recruitment; accommodation and food services; and other services that don’t fit into the survey’s other categories.
- Industry Sales: The indexes for industry sales were largely expansionary this quarter. Seven of the nine industry groups are forecasting increased sales with moderate to very strong confidence. Panelists in construction; professional, scientific, and technical services; and healthcare and social assistance had the highest industry sales indexes, as panelists in those industries anticipate higher sales in Q1 2025 compared to their Q4 2024 levels. Two industry groups had neutral sales indexes, wholesale trade and retail trade, communicating the overall expectation for a continuation of last quarter’s level of sales.
- Industry Profits: In Q1 2025, all of the industry groups are forecasting either growth in their profits compared to Q4 2024 or a continuation of their profit levels. This is a significantly more optimistic set of forecasts compared to the Q4 2024 profit forecasts, when only two groups had an expansionary profit outlook: finance, insurance, and real estate and “all other services”. In Q1 2025, professional, scientific, and technical services had the highest industry profits index at 64.1, followed closely by manufacturing.
- Industry Hiring: In the Q4 2024 survey, five of the industry hiring indexes were contractionary, two were neutral, and only construction had a mildly expansionary forecast. In Q1 2025, the hiring outlook is much better across industries: business leaders in seven industry groupings are expecting to increase hiring in Q1 2025 while two anticipate a continuation of last quarter’s hiring levels. Business leaders in construction have the highest confidence in their forecast for growth in hiring this quarter with a strongly expansionary index of 64.6. They were followed closely by professional, scientific, and technical services who had a Q1 2025 hiring index of 63.3, which is a 17.2-point increase from their mildly contractionary index in Q4 2024.
- Industry Capital Expenditures: In general, panelists are anticipating increased capital expenditures in Q1 2025 compared to last quarter with moderate to very strong confidence. Panelists in transportation, information, and utilities are the most confident in their expansionary forecast for Q1 2025 with an index of 66.7, which is a 26.7-point rebound from their strongly contractionary Q4 2024 index of 40.0. Only retail trade had a contractionary index of 39.3, making this the ninth consecutive quarter that panelists in that industry have forecast a decrease in capital spending.
Firm Size: First Quarter 2025 Outlook |
| Number of Employees | |||
|---|---|---|---|
| 0 to 19 | 20 to 99 | 100+ | |
| ABCI | 61.9 | 59.5 | 60.8 |
| Alabama Economy | 67.2 | 60.1 | 60.6 |
| US Economy | 64.3 | 61.7 | 65.0 |
| Industry Sales | 63.3 | 61.7 | 62.5 |
| Industry Profits | 57.8 | 56.9 | 58.1 |
| Industry Hiring | 58.8 | 56.4 | 60.0 |
| Industry Capital Expenditures | 60.1 | 60.1 | 58.8 |
Expectations for Economic Growth across Firm Sizes
- Heading into Q1 2025, business confidence increased for panelists in across firm sizes such that all three groups conveyed strong confidence in their expansionary forecasts. The ABCI for small firms, those with fewer than 20 employees, was the highest at 61.9 after increasing 11.1 points from the previous quarter. Compared to their peers in mid-sized and large firms, these business leaders had especially strong confidence forecasting improved conditions in the Alabama economy and increased industry sales compared to the previous quarter.
- Panelists in large firms, those with 100 or more employees, are also anticipating an expansionary quarter with a strong confident index of 60.8 after increasing 11.4 points from last quarter. Their component indexes include especially confident forecasts for growth in the US economy, as well as increased industry profits and hiring compared to Q4 2024.
- Though it was slightly lower than their counterparts’ ABCIs, the overall Q1 2025 confidence index for mid-sized firms was also strong at 59.5, a 12.1-point increase from Q4 2024. Business leaders in mid-sized firms are strongly confident forecasting improved conditions in the statewide and national economy as well as increased industry sales and capital expenditures.
The Center for Business and Economic Research would like to thank the 164 Alabama business executives who completed the first quarter 2025 ABCI survey. This is the 93rd consecutive quarter this report has been recorded, and it would not have been possible without your participation.
Be sure to log in during the March 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the second quarter of 2025.
Analysis provided by Susannah Robichaux, Socioeconomic Analyst, Center for Business and Economic Research, Culverhouse College of Business, The University of Alabama.