Alabama Business Confidence Index

Alabama Business Confidence Index™

Third Quarter 2022

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Economic Outlook is Mildly Negative

Alabama business leaders have a negative outlook for the third quarter of 2022 according to the most recent Alabama Business Confidence Index (ABCI) survey. After peaking in Q3 2021, Alabama business confidence has been on the decline. The ABCI decreased 7.3 points to register at a mildly negative index of 47.3 for Q3 2022. This is the first negative ABCI since Q2 2013, and while Alabama business leaders are still moderately optimistic about industry sales and hiring, their negative forecasts for the U.S. and statewide economies weigh heavily on the overall index.

Third Quarter 2022 Outlook

Statewide Change from Q2
ABCI 47.3 -7.3
Alabama Economy 41.1 -11.2
US Economy 29.3 -9.2
Industry Sales 55.0 -6.4
Industry Profits 49.0 -6.2
Industry Hiring 56.6 -6.3
Industry Capital Expenditures 52.9 -4.6


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: With an index of 41.1 after an 11.2-point decrease from Q2 2022, the Alabama outlook communicates moderately negative expectations for Q3 2022.
  • US Economy: Alabama panelists continue to forecast worse conditions for the U.S. economy in Q3 2022 with a very strongly negative index of 29.3. A 9.2-point decrease from the previous quarter, this is the third consecutive quarter the U.S. outlook has been negative.
  • Industry Sales: Despite a 6.4-point drop from Q2 2022’s index, industry sales are expected to increase this quarter with a moderately confident index of 55.0.
  • Industry Profits: The profits index decreased by 6.2 points to register at a slightly negative 49.0 in the Q3 2022 survey.
  • Industry Hiring: Though the index decreased 6.3 points, business leaders are still expecting to increase hiring in Q3 compared to Q2 2022 with moderate confidence. Industry hiring has been the highest component index for four consecutive quarters.
  • Industry Capital Expenditures: The index for industry capital expenditures is mildly positive this quarter at 52.9 after a 4.6-point decrease from Q2 2022.

Statewide Response Breakdown

Statewide Response Breakdown

Participants’ responses reported as percentages

Much Worse Somewhat Worse No Change Somewhat Better Much Better
Alabama Economy 3.4 49.5 27.0 19.6 0.5
US Economy 18.6 55.4 16.7 8.8 0.5
Industry Sales 1.0 25.5 30.4 38.7 4.4
Industry Profits 4.4 31.4 31.4 29.4 3.4
Industry Hiring 0.5 15.2 44.1 37.7 2.5
Industry Capital Expenditures 5.9 18.6 39.2 30.4 5.9



Historical Statewide ABCI™ and Industry Component Indexes

Historical Statewide ABCI™ and Economic Outlook Component Indexes

CBER’s Forecast for Alabama

The Center for Business and Economic Research is forecasting a 2.2-percent increase in Alabama GDP for 2022, which is 1.9 points below the 4.1 percent GDP growth the state saw in 2021. Alabama employment is expected to increase by 1.7 percent in 2022, and CBER anticipates that total tax receipts will grow by 13.0 percent in FY2022. Growth is expected to continue slowing in 2023, with forecasts for GDP, employment and tax receipts remaining several points below the 2022 numbers.

MSA Business Confidence Weighed Down by Concerns for U.S. and Statewide Economies

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. Despite the low ABCIs, all of the metro areas expect to continue increasing hiring in Q3 2022.

ABCI by Metro Area

Metropolitan Statistical Area (MSA): Third Quarter 2022 Outlook

Statewide Birmingham–Hoover Huntsville Mobile Montgomery Tuscaloosa
ABCI 47.3 46.5 51.1 46.4 45.7 44.8
Alabama Economy 41.1 35.0 45.8 39.8 39.8 36.6
US Economy 29.3 28.8 30.7 29.5 29.6 28.0
Industry Sales 55.0 56.2 61.7 50.0 50.9 52.2
Industry Profits 49.0 50.0 51.5 44.3 50.9 47.0
Industry Hiring 56.6 56.2 58.7 60.2 51.9 56.0
Industry Capital Expenditures 52.9 52.5 58.0 54.5 50.9 49.1


Hiring and Sales Expectations Remain Strong in Most Industry Forecasts

The contrast between panelists’ somewhat positive industry forecasts and strongly negative economic outlooks is quite visible in the breakdown of ABCI by industry. Many industry groups are still feeling strongly confident forecasting increased sales, hiring, or capital expenditures in the coming quarter, but their overall ABCIs are negative due to concerns for the statewide and U.S. economies. Industries are facing obstacles such as the lasting effects of the pandemic on the local workforce and prolonged difficulties with the global supply chain that introduce a higher level of uncertainty to their forecasts and outlook than in previous quarters.

Despite a 6.3-point decrease from its strongly confident Q2 2022 index, manufacturing had the highest ABCI at a moderately confident 54.2, with three of its four industry component indexes registering above 59, indicating strong confidence in industry growth. On the other end of the spectrum, the healthcare and social assistance ABCI decreased 3.1 points to register at a strongly negative 39.1, with industry panelists forecasting decreased profits, capital expenditures, and sales in Q3 2022.

Industry Component Index: Third Quarter 2022 Outlook

ABCI Change from Q2 Sales Profits Hiring Capital Expenditures
Manufacturing 54.2 -6.3 61.8 53.9 60.5 59.2
Professional/Scientific/Technical Services 49.9 -5.3 60.1 52.0 59.5 54.1
All Other Services 48.1 -6.9 56.1 48.6 56.6 55.2
Statewide 47.3 -7.3 55.0 49.0 56.6 52.9
Transportation/Information/Utilities 47.2 -1.6 62.5 50.0 50.0 66.7
Wholesale Trade 47.2 -13.2 58.3 58.3 66.7 54.2
Construction 46.8 -12.1 55.9 42.6 58.8 51.5
Retail Trade 45.3 -2.6 62.5 46.9 50.0 46.9
Finance/Insurance/Real Estate 44.1 -10.5 44.4 48.6 52.1 49.3
Healthcare/Social Assistance Services 39.1 -3.1 45.3 39.1 56.2 42.2


  • Industry Sales: Seven of the nine industries are forecasting growth in sales this quarter. Four industries are strongly confident in their optimistic forecasts with indexes above 60: retail trade; transportation, information, and utilities; manufacturing; and professional, scientific, and technical services. Panelists in finance, insurance, and real estate shared a negative outlook for Q3 2022 sales as healthcare and social assistance, with ABCIs right around 45. This is the second consecutive quarter that healthcare and social assistance has had a negative sales outlook.
  • Industry Profits: Industries’ expectations for profits ranged from moderately positive to strongly negative in the Q3 2022 ABCI survey. Panelists in wholesale trade had the highest profits index at 58.3, followed by the milder but still optimistic profit indexes of manufacturing (53.9) and professional, scientific, and technical services (52.0). Transportation, information, and utilities had a neutral ABCI of 50.0, indicating expectations for a continuation of last quarter’s levels of profits. The remaining five industries had negative profit indexes. Panelists in healthcare and social assistance are strongly confident in their negative forecast (39.1), and business leaders in construction are moderately confident (42.6) that their profits will decrease compared to Q2 2022’s levels.
  • Industry Hiring: No industry grouping had a negative hiring index this quarter. Two industries, retail trade as well as transportation, information, and utilities, had neutral indexes of 50. The remaining seven industries had a positive hiring index, with mild to strongly confident forecasts for increased hiring compared to the previous quarter. Wholesale trade and manufacturing had indexes above 60, indicating especially strong confidence in their forecasts for increased hiring.
  • Industry Capital Expenditures: Two-thirds of the industry groups are expecting to increase capital expenditures this quarter with indexes ranging from a mildly confident 51.5 for construction to a strongly confident 66.7 for transportation, information, and utilities. Panelists in healthcare and social assistance are forecasting decreased capital spending this quarter, with a moderately negative index of 42.2.


Firm Size: Third Quarter 2022 Outlook

Number of Employees
0 to 19 20 to 99 100+
ABCI 48.0 43.0 51.0
Alabama Economy 43.0 37.9 41.8
US Economy 29.7 26.6 31.6
Industry Sales 56.0 49.2 59.8
Industry Profits 50.0 42.6 54.5
Industry Hiring 55.7 55.1 59.4
Industry Capital Expenditures 53.5 46.9 58.6

Large Firms More Optimistic Than Counterparts

  • In the Q3 2022 survey, there was more variation in forecasts by firm size than in previous quarters. Large firms, those with 100 or more employees had the highest confidence at a mildly positive 51.0; small firms, those with up to 19 employees, had a mildly negative ABCI of 48.0; and mid-sized firms, those with 20 to 99 employees, had the lowest ABCI at a moderately negative 43.0. In previous quarters, the differences in forecasts by firm size has not been as pronounced with an average range of 3.2 for the previous nine quarters, but this quarter, the spread between the large and mid-sized ABCIs was much more pronounced at 8.0 points.
  • Firms of all sizes continue to forecast increased hiring in the coming quarter, this time with moderate confidence. Panelists in small firms are also expecting sales to increase compared to Q2 2022 with moderate confidence, and have a neutral outlook for industry profits, indicating expectations for a continuation of last quarter’s levels.
  • Business leaders at mid-sized firms are not as optimistic as their counterparts with moderately negative expectations for industry profits and a mildly negative outlook for capital expenditures. While small and large firms are forecasting increased sales with moderately confident indexes of 56.0 and 59.8, mid-sized firms had a neutral index of 49.2.
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The Center for Business and Economic Research would like to thank the 204 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.

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