Alabama Business Confidence Index

Alabama Business Confidence Index™

Second Quarter 2021

Download the Full Report

Strong Confidence in Economic Recovery this Quarter

Alabama business leaders are forecasting economic growth in the second quarter of 2021 with very strong confidence according to the most recent Alabama Business Confidence Index (ABCI) survey. With a very optimistic index of 64.3, ABCI panelists communicated the strongest optimism in economic growth since the COVID-19 pandemic began one year ago. This data comes from the ABCI survey, which is conducted quarterly by the Center for Business and Economic Research at the University of Alabama’s Culverhouse College of Business.

Second Quarter 2021 Outlook


Statewide Change from Q1
ABCI 64.3 8.2
Alabama Economy 70.7 13.0
US Economy 63.6 11.4
Industry Sales 68.4 8.5
Industry Profits 61.3 6.3
Industry Hiring 62.3 4.9
Industry Capital Expenditures 59.7 5.6

 

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 70.7 after a 13.0-point increase from Q1 2021, the Alabama economic outlook was the highest component index for the quarter, indicating very strong expectations for improved statewide economic conditions.
  • US Economy: Panelists throughout the state are expecting the national economy to improve in the second quarter compared with Q1 2021. The index registered at a strongly positive 63.6 after an 11.4-point increase from the previous quarter.
  • Industry Sales: Business leaders are feeling very confident forecasting increased sales this quarter compared to Q1 2021. The index increased 8.5 points to reach a strongly positive index of 68.4.
  • Industry Profits: Industry profits are also expected to increase from Q1 2021’s levels, as shown by the strongly confident index of 61.3 after a 6.3-point increase from the previous quarter.
  • Industry Hiring: With a very positive hiring index of 62.3 after a 4.9-point increase, business leaders are strongly confident in their forecasts for increased hiring in Q2 2021.
  • Industry Capital Expenditures: The index for the capital expenditures grew by 5.6 points to register at a moderately confident 59.7 in this quarter. Though it is the lowest index, it still indicates expectations for growth this quarter.

Statewide Response Breakdown

Statewide Response Breakdown

Participants’ responses reported as percentages


Much Worse Somewhat Worse No Change Somewhat Better Much Better
Alabama Economy 0.4 4.3 17.2 68.1 9.9
US Economy 0.9 15.5 22.4 50.9 10.3
Industry Sales 0.0 4.3 27.2 59.1 9.5
Industry Profits 0.4 14.2 29.3 51.7 4.3
Industry Hiring 0.9 5.6 43.5 43.5 6.5
Industry Capital Expenditures 1.3 6.9 47.8 39.7 4.3

 

CBER’s Forecast for Alabama

The Center for Business and Economic Research is forecasting a 3.1-percent increase in Alabama GDP for 2021. This recovery comes after a 2.6-percent drop in ALGDP in 2020. Employment is forecasted to increase by 1.5 percent in 2021, and CBER expects total tax receipts to increase by 3.8 percent for FY2021, compared to the 5.0 percent increase seen in FY2020.

Strong Confidence from Metro Panelists

Confidence soared across the state’s metro areas in the Q2 2021 survey as business leaders conveyed strong optimism in almost all of the survey components. Business confidence was highest in Tuscaloosa with an ABCI of 65.6, followed closely by Birmingham-Hoover at 65.5. Mobile’s ABCI reached 64.6 this quarter while Huntsville and Montgomery both had ABCIs of 63.8 for the quarter. All of the metros communicated incredibly favorable forecasts for most of the component indexes, with especially strong confidence in the Alabama economic outlook and industry sales growth.

ABCI by Metro Area

Metropolitan Statistical Area (MSA): Second Quarter 2021 Outlook


Statewide Birmingham–Hoover Huntsville Mobile Montgomery Tuscaloosa
ABCI 64.3 65.5 63.8 64.6 63.8 65.6
Alabama Economy 70.7 71.9 71.0 68.1 71.7 71.9
US Economy 63.6 67.2 60.7 65.3 70.0 66.2
Industry Sales 68.4 68.8 69.5 69.4 65.8 66.7
Industry Profits 61.3 58.6 61.0 65.3 59.2 62.7
Industry Hiring 62.3 64.1 63.2 58.3 60.0 64.5
Industry Capital Expenditures 59.7 62.5 57.4 61.1 55.8 61.8

 

Growth Expected Across Industries

Business confidence is high this quarter, with eight of the nine industry categories forecasting growth with strong confidence. This is the first quarter since Q1 2021 that all of the industry ABCIs have registered as positive, indicating expectations for growth across industry categories. Only healthcare and social assistance had an ABCI less than 60, with its Q2 2021 index coming in at a moderately confident 56.0 due to forecasts for decreased hiring and a continuation of last quarter’s capital expenditure. However, this lower ABCI is to be expected: healthcare and social assistance was one of the few industries who was consistently forecasting growth amidst the COVID-19 pandemic with an average ABCI of 56.8 from Q2 2020 to Q1 2021. Now that the vaccine rollout has begun and Alabama’s number of new cases per day is decreasing, it makes sense that the growth of healthcare and social would slow compared to the surge it experienced due to COVID-19. Meanwhile, wholesale trade had the highest ABCI at 67.4, an index led by strong expectations for increased industry sales in Q2 2021 compared to the previous quarter.

Industry Component Index: Second Quarter 2021 Outlook


ABCI Change from Q1 Sales Profits Hiring Capital Expenditures
Wholesale Trade 67.4 10.6 79.2 62.5 62.5 58.3
Transportation/Information/Utilities 66.3 19.1 65.9 59.1 65.9 70.5
All Other Services 66.1 14.1 68.9 63.5 63.9 61.9
Construction 65.6 14.0 73.4 60.9 68.8 60.9
Finance/Insurance/Real Estate 64.8 4.4 67.4 63.2 61.1 59.7
Statewide 64.3 8.2 68.4 61.3 62.3 59.7
Retail Trade 63.9 19.3 62.5 58.3 62.5 45.8
Professional/Scientific/Technical Services 63.9 4.0 65.8 60.3 62.0 57.6
Manufacturing 62.4 1.7 67.9 59.8 61.6 60.7
Healthcare/Social Assistance Services 56.0 9.5 67.9 51.8 48.2 50.0

 

  • Industry Sales: In the Q2 2021 survey, all of the nine industry categories forecast increased sales compared to the previous quarter with very strong confidence. Wholesale trade had the highest sales index at an extremely confident 79.2, followed by construction at 73.4. The remaining industries’ sales indexes ranged from a 62.5 for retil trade to 68.9 for the “All Other Services,” 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.
  • Industry Profits: Industries are generally feeling optimistic about their profit forecasts for Q2 2021: five industries expect to increase hiring this quarter with strong levels of confidence, three anticipate grow with moderate confidence, and only healthcare and social assistance is forecasting growth with mild confidence. Panelists in finance, insurance, and real estate; “All Other Services”; and wholesale trade had the highest Q2 2021 profits indexes, all registering at or above 62.5. Healthcare and social assistance had the lowest profits index at a mildly positive 51.8.
  • Industry Hiring: Panelists across industries are feeling strongly confident in their forecasts for increased hiring in Q2 2021 compared to the previous quarter. Eight of the nine industry hiring indexes registered above 61.0, a good sign that businesses throughout Alabama’s economy are expecting to expand their hiring this quarter. Only healthcare and social assistance had a negative index at 48.2, a very mildly negative index that communicates the possibility of a contraction in the industry’s Q2 2021 hiring compared to its Q1 2021 levels.
  • Industry Capital Expenditures: Indexes for capital expenditures were the most varied industry component index in the Q2 2021 survey. Business leaders in four of the nine industry categories are forecasting increased sales with strong confidence compared to the previous quarter with indexes above 60. Transportation, information, and utilities had the highest Q2 2021 capital expenditures index at 70.5. This industry’s expectations for capital spending have oscillated between neutral, moderately negative, and mildly positive in the last year, so this strong confidence signals a return to pre-pandemic levels of confidence. Healthcare and social assistance has a neutral capital expenditures index of 50, signalling expectations for a continuation of Q1’s levels. Only retail trade had a negative index of 46.4, forecasting the continued contraction of the industry’s capital expenditure compared to the previous quarter.

 

Firm Size: Second Quarter 2021 Outlook


Number of Employees
0 to 19 20 to 99 100+
ABCI 65.7 62.9 63.7
Alabama Economy 70.8 71.1 70.3
US Economy 63.4 62.5 64.6
Industry Sales 71.6 66.4 66.1
Industry Profits 64.7 56.9 60.4
Industry Hiring 62.9 63.8 60.4
Industry Capital Expenditures 60.8 56.9 60.4

All Firms Sizes Forecasting Economic Growth with Strong Confidence

  • In the Q2 2021 survey, all three categories of firm size expressed strong confidence in growth compared to Q1 2021, with indexes ranging from 62.9 to 65.7. Small firms, those with fewer than 20 employees, had the highest ABCI this quarter with all of their component indexes registering above 60.0. Firms of all sizes had especially strong confidence in their forecasts for improved statewide economic conditions and increased industry sales compared to Q1 2021, though small firms had the highest sales index of the three groups.
  • Large firms, those with 100 or more employees, had an ABCI of 63.7, indicating strong confidence in Q2 2021 growth compared to the previous quarter. These business leaders are also feeling strongly confident about growth in all of the ABCI’s component indexes with indexes all registering above 60.0. Large firms had the highest U.S. economic outlook for the quarter.
  • The ABCI for mid-sized firms registered at 62.9 this quarter. Firms of this size have 20 to 99 employees. Mid-sized firms had the highest hiring index of the three sizes of businesses, with a strongly confident index of 63.8. Business leaders in these firms were only moderately confident forecasting growth in industry profits and capital expenditures, with indexes of 56.9.
CSV  Copy  

The Center for Business and Economic Research would like to thank the 232 Alabama business executives who completed the second quarter 2021 ABCI survey. This is the 78th consecutive quarter this report has been recorded, and it would not have been possible without your participation.

Be sure to log in during the June 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the third quarter of 2021.

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

X