Alabama Business Confidence Index

Alabama Business Confidence Index™

First Quarter 2023

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Q1 2023 Business Outlook Negative

Alabama business leaders’ outlook remained negative in the first quarter of 2023 according to the most recent \ABCI\ (ABCI) survey. The ABCI decreased 2.7 points from Q4 2022’s mildly negative index to reach a moderately negative 45.7. This is the third consecutive quarter with a negative forecast. However, in previous quarters, the US and Alabama economic outlooks were significantly lower than the industry indexes, but in the Q1 2023 survey, business leaders also had negative forecasts for three of the four indexes.

First Quarter 2023 Outlook


Statewide Change from Q4
ABCI 45.7 -2.7
Alabama Economy 45.7 -0.6
US Economy 34.4 -0.2
Industry Sales 49.5 -2.9
Industry Profits 45.1 -3.7
Industry Hiring 53.6 -2.0
Industry Capital Expenditures 46.2 -6.2

 

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 45.7, business leaders are still expecting to worse conditions in the statewide economy with moderate confidence in Q1 2023.
  • US Economy: The index for the US economy registered at 34.4 in the Q1 2023 survey, indicating business leaders’ very strong confidence in their negative forecast. Over 60 percent of panelists are anticipating worse conditions in Q1 2023 for the US economy compared to Q4 2023, and this is the fifth consecutive quarter that the US economic outlook index has been negative.
  • Industry Sales: The sales index communicates expectations for a continuation of last quarter’s levels of sales in Q1 2023, with a neutral index of 49.5 after a 2.9-point decrease from Q4 2022.
  • Industry Profits: Alabama panelists are forecasting decreased profits this quarter with a moderately negative index of 45.1. This is 3.7 points below the Q4 2022 level, with almost 42 percent of panelists forecasting decreased profits in Q1 2023.
  • Industry Hiring: Despite the index decreasing 2.0 points, industry hiring is still expected to increase this quarter with a mildly positive index of 53.6. This is the only component index with a positive forecast in Q1 2023.
  • Industry Capital Expenditures: The Q1 2023 capital expenditures index registered at a mildly negative 46.2, indicating expectations for a decrease in capital spending compared to the previous quarter.

Statewide Response Breakdown

Statewide Response Breakdown

Participants’ responses reported as percentages


Much Worse Somewhat Worse No Change Somewhat Better Much Better
Alabama Economy 1.0 37.0 41.1 19.8 1.0
US Economy 11.5 51.6 25.5 10.9 0.5
Industry Sales 3.1 32.3 30.7 31.2 2.6
Industry Profits 5.2 36.5 33.3 22.9 2.1
Industry Hiring 1.6 19.3 44.8 31.8 2.6
Industry Capital Expenditures 6.8 26.6 43.2 21.9 1.6

 

 

CBER’s Forecast for Alabama

The Center for Business and Economic Research is forecasting a 0.1-percent increase in Alabama GDP for 2023, a significant slowdown compared to the 1.3- and 5.1-percent rebound the state experienced in 2022 and 2021, respectively. Alabama employment is expected to decrease slightly in 2023, decreasing by 0.3 percent, but despite the mildness of the GDP and employment forecasts, CBER anticipates total tax receipts growing by 7.0 percent in FY2023 due to a continuation of strong consumer spending.

Negative Outlook from All Metros

The ABCIs for Alabama’s metro areas are all below 50 this quarter, but level of confidence in those forecasts varied. Huntsville had the highest ABCI at a mildly negative 47.9, followed closely by Mobile at 47.0. Both metros had moderately confident hiring indexes, which set them apart from the other metros. Tuscaloosa had an ABCI of 45.6, with neutral expectations for sales and hiring. Birmingham–Hoover and Montgomery had the lowest ABCIs of 43.5 and 42.9, respectively. The indexes in these metros were all mildly to strongly negative, with the exception of Montgomery’s mildly positive hiring forecast.

ABCI by Metro Area

Metropolitan Statistical Area (MSA): First Quarter 2023 Outlook


Statewide Birmingham–Hoover Huntsville Mobile Montgomery Tuscaloosa
ABCI 45.7 43.5 47.9 47.0 42.9 45.6
Alabama Economy 45.7 44.4 46.7 40.6 48.9 45.3
US Economy 34.4 30.6 33.5 32.3 34.8 38.0
Industry Sales 49.5 48.1 51.9 53.1 43.5 50.5
Industry Profits 45.1 44.4 45.8 52.1 40.2 45.3
Industry Hiring 53.6 48.1 59.4 57.3 52.2 49.5
Industry Capital Expenditures 46.2 45.4 50.0 46.9 38.0 44.8

 

Most Industry Indexes Negative in Q1 2023

The industry index, which only includes panelists’ forecasts for their own industry sales, profits, hiring, and capital expenditures, were largely negative in the Q1 2023 survey. Panelists in professional, scientific, and technical services had the highest industry index at a moderately positive 55.9, with strongly confident expectations for increased sales and hiring compared to the previous quarter. Business leaders in construction are also forecasting increased hiring and sales, though with milder confidence, leading them to be the only other group to have a positive industry index at 52.5. Manufacturing had a neutral index of 49.0 after gaining 2.1 points from last quarter, indicating expectations for a continuation of Q4 2022’s overall level of industry performance. In the Q4 2022 survey, “All Other Services” had the highest industry index, due to their strongly confident forecasts for growth in sales, hiring, and capital expenditures. However, in Q1 2023, their industry index dropped 11.4 points as panelists anticipate decreased profits and capital expenditures compared to Q4 2022. “All Other Services” is the category that 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. The remaining six industry groups are largely anticipating decreases in their industry component indexes in Q1 2023 compared to Q4 2022 with varying levels of confidence.

Industry Component Index: First Quarter 2023 Outlook


Industry Index Change from Q4 Sales Profits Hiring Capital Expenditures
Professional/Scientific/Technical Services 55.9 5.3 60.4 53.0 62.8 47.6
Construction 52.5 6.7 53.3 51.7 58.3 46.7
Manufacturing 49.0 2.1 50.0 43.4 51.3 51.3
All Other Services 48.8 -11.4 51.2 44.5 53.0 46.3
Statewide 48.6 -3.7 49.5 45.1 53.6 46.2
Healthcare/Social Assistance Services 47.1 -8.2 48.1 42.3 55.8 42.3
Wholesale Trade 43.8 11.5 45.8 41.7 45.8 41.7
Transportation/Information/Utilities 43.1 -13.2 30.6 38.9 47.2 55.6
Finance/Insurance/Real Estate 42.9 -7.1 41.2 40.5 47.3 42.6
Retail Trade 34.3 -19.4 33.3 25.0 45.8 33.3

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.

 

  • Industry Sales: Forecasts for sales varied significantly by industry. Three of the nine industry groups expect to increase their hiring in Q1 2023 with confidence ranging from a mildly positive 51.2 from “All Other Services” to a very strong 60.4 from professional, scientific, and technical services. Manufacturing is forecasting a continuation of last quarter’s sales levels with a neutral sales forecast at 50. The remaining five industry groups anticipate a decrease in sales compared to Q4 2022 with negative indexes as mild as 48.1 for healthcare and social assistance services to as very strongly confident as 30.6 for transportation, information, and utilities and 33.3 for retail trade, respectively.
  • Industry Profits: In the Q4 2022 survey, expectations for profits were already somewhat low, but the overall forecasts for profits have decreased across industries in the Q1 2023 survey. Seven of the nine industry groups are anticipating a decrease in profits this quarter. Business leaders in retail trade are the most confident in their negative forecast, but panelists in transportation, information, and utilities are also feeling strongly confident that their profits will decrease compared to Q4 2022. Only two of the nine of the industry groups are expecting increased profits this quarter, though both with only mild confidence.
  • Industry Hiring: Hiring had the highest concentration of industries forecasting industry growth this quarter, with positive hiring indexes for five of the nine industry groups. Professional, scientific, and technical services had the highest confidence in their positive forecast, but business leaders in “All Other Services” and healthcare and social assistance services are also anticipating increased hiring compared to last quarter. The four industries with hiring indexes below 50 were only mildly negative with values ranging from 45.8 to 47.3.
  • Industry Capital Expenditures: All but two industries expect to decrease capital expenditures in the coming quarter compared to Q1 2023 with mild to strong confidence in those forecasts. Only panelists in manufacturing and transportation, information, and utilities are anticipating a continuation of growth in their capital expenditures this quarter.

 

Firm Size: First Quarter 2023 Outlook


Number of Employees
0 to 19 20 to 99 100+
ABCI 46.9 42.7 46.6
Alabama Economy 48.1 40.8 46.4
US Economy 37.2 29.1 34.9
Industry Sales 52.5 44.4 49.6
Industry Profits 44.7 41.8 48.0
Industry Hiring 52.2 55.1 54.4
Industry Capital Expenditures 46.9 44.9 46.4

Midsize Firms Most Negative in Q1 2023 Forecasts

  • All three firm size groupings had negative ABCIs in the Q1 2023 survey. Midsize firms, those with 20 to 99 employees, had the lowest ABCI at a moderately negative 42.7, while the ABCIs for small firms, those with up to 19 employees, and large firms, those with 100 or more employees, were only mildly negative. This is the third consecutive quarter that the midsize firms have had a lower ABCI than their counterparts. Midsize firms had the lowest values for all of the component indexes in the Q1 2023 survey except hiring, where their moderately positive index of 55.1 was the most confident of all the groupings’ forecasts.
  • The outlook for the US economy remained the most negative index across all firm sizes with indexes ranging from an extremely negative 29.1 from midsize firms to a strongly negative 37.2 from small firms. In contrast, all three groups had a positive outlook for hiring in Q1 2023 compared to the previous quarter, with mild to moderate confidence in those forecasts.
  • Besides hiring, the only other positive industry component index was the sales index for small businesses, which registered at a mildly positive 52.5. Large firms had a neutral sales index of 49.6, while midsize firms had a moderately negative forecast of 44.4. Most of the other component indexes for the three firm groupings were mildly negative in their forecasts for Q1 2023 compared to Q4 2022.
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The Center for Business and Economic Research would like to thank the 192 Alabama business executives who completed the first quarter 2023 ABCI survey. This is the 85th 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 2023.

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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