Alabama Business Confidence Index

First Quarter 2020

Download the Full Report

Confidence Strengthens Heading into 2020

Business leaders throughout Alabama continued to express strong confidence in economic growth heading into the first quarter of 2020. The index reached 62.6 after increasing 3.3 points from the previous quarter. This data comes from the Alabama Business Confidence Index (ABCI) survey, which is conducted quarterly by the Center for Business and Economic Research at the University of Alabama’s Culverhouse College of Business.

Statewide Change from Q4
ABCI 62.6 3.3
Alabama Economy 63.1 2.6
US Economy 59.9 5.0
Industry Sales 66.1 3.8
Industry Profits 63.1 4.2
Industry Hiring 61.1 1.1
Industry Capital Expenditures 62.1 3.0


Statewide Component Index Analysis

  • Alabama Economy: Business leaders throughout the state expect Alabama’s economic conditons to improve with strong confidence in the first quarter with an index of 63.1 after a 2.6-point increase from Q4 2019.
  • US Economy: Alabama business leaders are also forecasting improved national economic conditions in Q1 2020, though with moderately strong confidence. The U.S. economy index increased 5.0 points to reach 59.9 this quarter.
  • Industry Sales: The sales index was the highest component index this quarter after gaining 3.8 points to reach 66.1. This signals very strong confidence for increased levels of sales in Q1 2020 compared to the previous quarter.
  • Industry Profits: Confidence in increased profits was also high in the Q1 2020 survey: the index registered at 63.1 after a 4.2-point increase.
  • Industry Hiring: With an index of 61.1 after a 1.1-point increase, Alabama business leaders are still confidently forecasting increased hiring compared to the previous quarter.
  • Industry Capital Expenditures: The index for capital expenditures increased 3.0 points to register at 62.1 in this quarter, communicating strong confidence in increased capital expnditures compared to Q4 2019.

Statewide Response Breakdown

Statewide Response Breakdown

Participants’ responses reported as percentages

Much Worse Somewhat Worse No Change Somewhat Better Much Better
Alabama Economy 0.0 4.0 44.3 47.0 4.7
US Economy 0.7 7.4 47.7 40.3 4.0
Industry Sales 0.0 8.1 26.8 57.7 7.4
Industry Profits 0.0 12.1 30.9 49.7 7.4
Industry Hiring 0.0 7.4 43.0 47.7 2.0
Industry Capital Expenditures 0.7 6.7 41.6 45.6 5.4


ABCI by Metro Area


CBER’s Forecast for Alabama

The Center for Business and Economic Research forecasts 2.1 percent growth in Alabama GDP for the 2019-2020 fiscal year. This is an increase from the 2.0 percent growth in 2018, and fits with the stronger business confidence measured in this survey. Employment is expected to grow 2.2 percent in 2019, and CBER forecasts tax revenues increasing 5.9 percent in the 2019-2020 fiscal year.

High Confidence in Metro Economies

Business confidence increased throughout the three of the state’s four largest metro areas this quarter. Only Huntsville’s ABCI decreased in Q1 2020. However, with an index of 64.2, metro area panelists continue to communicate strong confidence in economic expansion. Montgomery had the highest ABCI at 68.1, indicating expectations for growth after two quarters of negative ABCIs. Mobile’s business community is also very confident moving into this quarter with an ABCI of 65.6. Birmingham–Hoover had the lowest ABCI at 58.1, though the index still communicates moderate confidence in growth compared to the previous quarter.


Metropolitan Statistical Area (MSA): First Quarter 2020 Outlook

Statewide Birmingham-Hoover Huntsvile Mobile Montgomery
ABCI 62.6 64.2 64.2 65.6 68.1
Alabama Economy 63.1 58.8 65.1 65.0 72.9
US Economy 59.9 55.1 58.9 65.0 70.8
Industry Sales 66.1 61.0 66.7 70.0 75.0
Industry Profits 63.1 54.4 65.1 70.0 68.8
Industry Hiring 61.1 56.6 64.6 65.0 62.5
Industry Capital Expenditures 62.1 62.5 65.1 58.3 58.3

Growth Expected by All Industries

After two quarters of expectations being divided between positive and mildly negative forecasts, all industries are expecting growth in Q1 2020. After increasing 16.0 points to reach 68.1, the index for retail trade was the highest industry ABCI this quarter. This comes after much more moderate or negative expectations in 2019 and conveys the industry’s strong expectations for growth in Q1 2020 compared to the previous quarter. Panelists in retail trade are especially confident in increased profits (75.0) and sales (66.7). Transportation, information, and utilities had the lowest ABCI in the Q1 2020 survey, with a mildly optimistic index of 54.2. These panelists confidently forecast growth in capital expenditures (70.8), but are anticipating a decrease in hiring (45.8) compared to Q4 2019’s levels.


Industry Component Index: First Quarter 2020 Outlook

ABCI Change from Q4 Sales Profits Hiring Capital Expenditures
Retail Trade 68.1 16.0 66.7 75.0 62.5 58.3
Healthcare/Social Assistance Services 65.4 5.5 67.5 65.0 62.5 57.5
Professional/Scientific/Technical Services 64.6 2.3 70.5 67.9 66.1 57.1
Construction 63.9 0.4 65.0 58.3 63.3 66.7
Statewide 62.6 3.3 66.1 63.1 61.1 62.1
Manufacturing 62.5 10.4 71.1 59.2 61.8 61.8
Finance/Insurance/Real Estate 61.5 3.0 68.3 61.5 58.7 61.5
All Other Services 61.5 -4.7 62.5 66.1 61.6 63.4
Wholesale Trade 57.3 7.8 56.2 53.1 46.9 65.6
Transportation/Information/Utilities 54.2 -0.4 58.3 54.2 45.8 70.8


  • Industry Sales: Forecasts for increased sales were confident across the various industries, with seven of the nine industry categories’ sale index registering above 62. Panelists in manufacturing led in confidence, with the very confident index of 71.1, indicating strong expectations for increased sales compared to levels seen in Q4 2019. Panelists in wholesale trade had the lowest sales index at 56.2, though this index still conveys moderate confidence in higher sales moving into Q1 2020.
  • Industry Profits: In Q1 2020, no industries expect their profits to decrease from Q4 2019’s levels. Five of the nine industry categories expressed strong confidence in forecasting profit growth with indexes above 60.0. Retail trade had the highest profits index at 75.0, indicating very strong confidence in their forecast for increased profits in Q1 2020 compared to the previous quarter. Professionals in wholesale trade and in transportation, information, and utilities were milder in their expectations with indexes of 53.1 and 54.2, respectively.
  • Industry Hiring: Most industries forecast increased hiring this quarter with moderate to very strong confidence. Only professionals in wholesale trade and in transportation, information, and utilities expect their hiring to decrease compared to Q4 2019, with mildly confident indexes of 46.9 and 45.8. On the other side of the spectrum, panelists in professional, scientific, and technical industries led in confidence with an index of 66.1, indicating strong optimism for increased hiring compared to Q4 2019.
  • Industry Capital Expenditures: This quarter, panelists across all industry categories expect increased capital expenditures with moderate to very strong confidence. Panelists in six of the nine industry categories communicated strong confidence with indexes above 60.0, with transportation, information, and utilities leading with a capital expenditures index of 70.8. Professional, scientific, and technical services had the lowest index at 57.1, though panelists in the industry are still moderately confident their capital expenditures will increase this quarter compared to Q4 2019.


Firm Size: First Quarter 2020 Outlook

Number of Employees
0 to 19 20 to 99 100+
ABCI 64.8 61.4 60.9
Alabama Economy 67.2 61.3 59.7
US Economy 62.5 57.7 58.7
Industry Sales 67.2 65.5 65.3
Industry Profits 66.4 63.7 58.7
Industry Hiring 62.9 60.1 59.7
Industry Capital Expenditures 62.5 60.1 63.3

Strong Confidence Regardless of Firm Size

  • Since Q3 2019, small firms, those with fewer than 20 employees, have had the highest ABCI. This quarter, the index registered at a very high 64.8, indicating strong confidence in economic growth compared to the previous quarter. This confidence extends to all six of the component indexes, though industry sales and the statewide economic index led with indexes of 67.2.
  • Mid-sized firms, those with 20 to 99 employees, are also feeling optimistic about Q1 2020 with an ABCI of 61.4. Panelists in these firms are feeling strongly confident in their positive forecasts for the industry components, with industry sales leading with an index of 65.5. Confidence in improved conditions for the U.S. economy was more moderate this quarter with an index of 57.7.
  • Panelists in large firms, those with 100 or more employees, expressed strong confidence in growth this quarter with an ABCI of 60.9. Business leaders of these large firms are most confident about growth in industry sales and capital expenditures, with very strong indexes of 65.3 and 63.3, respectively. The indexes for hiring and U.S. economy were more moderate at 58.7, still indicating fairly strong confidence in growth compared to Q4 2019.
CSV  Copy  

The Center for Business and Economic Research would like to thank the 149 Alabama business executives who completed the first quarter 2020 ABCI survey. This is the 73rd 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 2020.

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