Alabama Business Confidence Index

Alabama Business Confidence Index™

Second Quarter 2023

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Mildly Negative Forecast in Q2 2023

The Alabama Business Confidence Index (ABCI) grew 2.7 points from last quarter to register at a mildly negative 48.4 in the Q2 2023 survey. This is the fourth consecutive quarter that the index has been negative, though it is slightly less negative than last quarter’s ABCI. Business confidence has been declining since Q4 2021, but interestingly, the highest and lowest component indexes have been consistent these last seven quarters: hiring has been the highest index and is the only index to remain positive the entire time, and the US outlook has been the lowest index, consistently registering more than 10 points below the other indexes.

Second Quarter 2023 Outlook

Statewide Change from Q1
ABCI 48.4 2.7
Alabama Economy 48.0 2.3
US Economy 36.0 1.6
Industry Sales 54.7 5.2
Industry Profits 48.7 3.6
Industry Hiring 55.0 1.4
Industry Capital Expenditures 47.9 1.7


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: The Q2 2023 Alabama economic index registered at a mildly negative 48.0, indicating expectations for worse statewide economic conditions compared to the previous quarter.
  • US Economy: With an index of 36.0, business leaders are still expecting worse conditions in the US economy with strong confidence in Q2 2023. This is the sixth consecutive quarter that the US outlook has been negative and the seventh that it has been the lowest component index.
  • Industry Sales: This index had the highest increase from Q1 2023 to register at 54.7 in the Q2 2023 survey, indicating business leaders’ moderate confidence that sales will increase compared to last quarter.
  • Industry Profits: The Q2 2023 profits index communicates expectations for a decrease from last quarter’s levels of profits with a mildly negative index of 48.7.
  • Industry Hiring: Alabama panelists are forecasting increased hiring this quarter with a moderately positive index of 55.0. Hiring has been the highest ABCI component index for six consecutive quarters.
  • Industry Capital Expenditures: Industry capital expenditures are expected to decrease this quarter with a mildly negative index of 47.9.

Statewide Response Breakdown

Statewide Response Breakdown

Participants’ responses reported as percentages

Much Worse Somewhat Worse No Change Somewhat Better Much Better
Alabama Economy 1.9 26.6 50.0 20.6 0.9
US Economy 9.8 49.1 28.5 12.6 0.0
Industry Sales 1.4 24.3 32.7 37.4 4.2
Industry Profits 3.7 31.3 33.2 29.9 1.9
Industry Hiring 1.9 13.1 51.9 29.4 3.7
Industry Capital Expenditures 7.0 21.0 48.6 20.1 3.3



CBER’s Forecast for Alabama

The Center for Business and Economic Research is forecasting a 0.5-percent increase in Alabama GDP for 2023. Though positive, it is a slower rate of GDP growth than seen in 2021 (5.1 percent) and 2022 (1.6 percent). Alabama employment growth is expected to plateau in 2023, only growing by about 0.3 percent. Total tax receipts are forecast to grow by 5.3 percent in FY2023. While this is more growth than predicted for GDP and employment, it is still a notable decrease from last year’s 15.2-percent.

Business Outlook Varies by Metro

The forecasts from the metro areas ranged from moderately negative to mildly positive in the Q2 2023 survey. Business leaders in Huntsville had the highest ABCI at 52.0, making them the only metro with a positive outlook for the quarter. Mobile was not far behind, though, with a neutral ABCI of 49.6. Tuscaloosa had mild confidence in their negative forecast (45.7), which was tempered by mildly positive forecasts for industry sales and hiring. Montgomery and Birmingham–Hoover had the lowest ABCIs for the quarter at 43.8 and 43.0, respectively, with all of their component indexes registering at or below the neutral 50.

ABCI by Metro Area

Metropolitan Statistical Area (MSA): Second Quarter 2023 Outlook

Statewide Birmingham–Hoover Huntsville Mobile Montgomery Tuscaloosa
ABCI 48.4 43.0 52.0 49.6 43.8 45.7
Alabama Economy 48.0 44.0 52.2 46.6 45.0 44.3
US Economy 36.0 30.0 39.2 35.2 33.8 34.2
Industry Sales 54.7 48.0 59.2 58.0 48.8 51.3
Industry Profits 48.7 42.0 52.2 53.4 40.0 45.6
Industry Hiring 55.0 49.0 58.2 58.0 50.0 53.5
Industry Capital Expenditures 47.9 45.0 50.6 46.6 45.0 45.2


Mixed Forecasts for Industry Breakdown

The industry index, which only includes panelists’ forecasts for their own industry sales, profits, hiring, and capital expenditures, ranged from mildly negative to moderately positive in the Q2 2023 survey. In Q2 2023, panelists in professional, scientific, and technical services and construction are continuing to forecast growth with mild confidence, but they are also joined by “All Other Services” and manufacturing, whose indexes grew significantly from Q1 2023 to reach moderately high levels of confidence in their positive outlook. “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. Though it remained negative, the index for retail trade had the highest increase from last quarter growing 9.4 points from its very negative Q1 2023 index to reach a moderately negative 43.8. Expectations for hiring in retail are positive, but business leaders in the industry are forecasting decreased capital spending with very strong confidence in Q2 2023. The outlook from business leaders in finance, insurance, and real estate was the lowest industry index for the quarter at a moderately negative 42.6. This was the only industry category to have negative forecasts for all of the component indexes.

Industry Component Index: Second Quarter 2023 Outlook

Industry Index Change from Q1 Sales Profits Hiring Capital Expenditures
All Other Services 56.8 8.0 61.6 53.0 59.1 53.4
Manufacturing 56.0 7.0 59.4 57.3 58.3 49.0
Construction 53.3 0.8 59.2 53.9 52.6 47.4
Professional/Scientific/Technical Services 52.2 -3.8 56.1 48.6 55.4 48.6
Statewide 51.6 3.0 54.7 48.7 55.0 47.9
Wholesale Trade 47.9 4.2 54.2 45.8 58.3 33.3
Transportation/Information/Utilities 47.7 4.6 46.9 43.8 50.0 50.0
Healthcare/Social Assistance Services 46.7 -0.5 44.1 44.1 55.9 42.6
Retail Trade 43.8 9.4 46.4 42.9 53.6 32.1
Finance/Insurance/Real Estate 42.6 -0.2 41.7 36.4 47.0 45.5

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: In the Q2 2023 survey, the sales component index increased for almost all of the industry groups such that the forecasts ranged from moderately negative to strongly positive. Five of the nine industry groups had a positive sales outlook in Q2 2023. “All Other Services” had the highest sales index at 61.6, followed closely by manufacturing and construction at 59.4 and 59.2, respectively. Panelists in manufacturing had a neutral outlook for sales in the Q1 2023 ABCI survey, so this is a significant increase in expectations for the industry. Wholesale trade also had a dramatic increase in their sales index, gaining 8.4 points to rise from a negative outlook of 45.8 from Q1 2023 to a positive 54.2 this quarter.
  • Industry Profits: Forecasts for profits varied by industry. Most industry groups are still forecasting decreased profits compared to the previous quarter with indexes ranging from mild to strongly negative in Q2 2023. Panelists in finance, insurance, and real estate had the lowest profits index at 36.4, indicating very strong expectations for decreased profits compared to last quarter. Only three industry groups are forecasting increased profits this quarter.
  • Industry Hiring: All but two industries expect to increase hiring in the coming quarter. Panelists in “All Other Services” are the most confident in their positive forecast with a hiring index of 59.1, but they are followed closely by manufacturing and wholesale trade, who both had indexes of 58.3. The only industry with a negative hiring index was finance, insurance, and real estate with a mildly negative 47.0.
  • Industry Capital Expenditures: Capital expenditures had the highest concentration of negative industry forecasts for Q2 2023, with seven of the nine industry groups anticipating a decrease in capital spending compared to last quarter. Wholesale trade and retail trade both had very strongly negative forecasts for capital expenditures; healthcare and social assistance services had a moderately negative outlook; and the remaining five industries with negative capital spending indexes only had mild confidence in their forecasts.


Firm Size: Second Quarter 2023 Outlook

Number of Employees
0 to 19 20 to 99 100+
ABCI 48.8 49.5 46.7
Alabama Economy 48.6 48.4 46.7
US Economy 36.1 35.7 36.1
Industry Sales 56.2 55.7 51.2
Industry Profits 49.2 50.4 46.3
Industry Hiring 53.5 58.2 54.1
Industry Capital Expenditures 48.9 48.4 45.9

Mid-Size Firms Lead in Industry Confidence

  • Though the ABCIs by firm size all remained below 50, there were varied levels of confidence in the forecasts for the component indexes. Midsize firms, those with 20 to 99 employees, had the highest Q2 2023 ABCI which increased 6.8 points to reach an almost neutral 49.5 for the quarter. This comes after three quarters of the midsize ABCI being the lowest industry firm ABCI. This quarter, business leaders in midsize firms had the highest confidence in their forecasts for increased industry hiring and profits, making their index rise above the small and large firms’.
  • Small firms, those with up to 19 employees, had a mildly negative ABCI of 48.8 for the quarter. Business leaders from these firms had the highest confidence in their forecast for increased sales. Although their hiring index was positive, it was slightly below their counterparts’ higher levels of confidence. Small firms had the least negative capital expenditures index at 48.9.
  • Large firms had the lowest ABCI of the three groupings at a mildly negative 46.7, which is only 0.1 points above the Q1 2023 large firm ABCI, indicating a continuation of last quarter’s forecasts. Though panelists at these firms had mildly positive expectations for industry sales and hiring, their indexes for sales, profits, and capital expenditures were a few points below the midsize and small firms’ outlooks.
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The Center for Business and Economic Research would like to thank the 214 Alabama business executives who completed the second quarter 2023 ABCI survey. This is the 86th 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 2023.

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