Montgomery Metro Area Report

Alabama Business Confidence Index™

Second Quarter 2025

Montgomery Businesses Forecast Contraction in Q2 2025

After a strongly expansionary forecast in Q1 2025, Montgomery’s ABCI decreased by 15.0 points to reach a mildly contractionary 48.3. Confidence across all of the component indexes fell this quarter with decreases ranging from 10 to 23 points. Three of the six component indexes are contractionary for this quarter: metro business leaders are anticipating worse economic conditions in the US and state compared to last quarter as well as lower profits. Sales and hiring are expected to continue at an overall similar level as the previous quarter. Only capital expenditures had an overall expansionary index.

Index above 50 indicates positive outlook as compared to last quarter.
Index below 50 indicates negative outlook compared to last quarter.

Montgomery Component Index Analysis

• Alabama Economy: After a very strongly confident outlook of 70 in Q1 2025, Montgomery’s Alabama economic index dropped 22.9 points in the Q2 2025 survey to reach a mildly confident contractionary index of 47.1.
• US Economy: Likewise, the metro’s forecast for the US economy registered as expansionary in Q1 2025 for the first time since Q4 2020, but dropped 20.9 points in the Q2 2025 survey to a moderately contractionary index of 44.1.
• Industry Sales: The sales index decreased 13.3 points to reach a neutral index of 50.0, indicating overall expectations for a continuation of last quarter’s levels of sales.
• Industry Profits: Profits are expected to decrease compared to Q1 2025 with a mildly confident contractionary index of 47.1 after decreasing 12.9 points this quarter.
• Industry Hiring: The hiring index for Montgomery is also neutral this quarter at 50.0 after decreasing 10.0 points from last quarter’s strongly confident index of 60.0.
• Industry Capital Expenditures: Expectations for capital expenditures are mildly expansionary this quarter: the index decreased 10.2 points to reach 51.5.

ABCI Montgomery in Context

Montgomery’s ABCI oscillated between contractionary and mildly expansionary forecasts from Q3 2022 to Q3 2024. During that time, the metros’ US outlook remained consistently contractionary (averaging 38); the Alabama outlook was primarily contractionary with the occasional neutral or positive forecast; and the most of the industry indexes were primarily expansionary with a few quarters of neutral or contractionary expectations. There was not enough participation to have data for Montgomery in Q4 2024, but then there was a significant surge in business confidence in Q1 2025 in the metro and throughout the state. This did not last long though, as Q2 2025 saw the return of more conservative forecasts.

Panelists in Mobile had the highest metro ABCI this quarter at 54.4, with more confidence in their forecasts for increased sales, profits, and hiring than the other metro areas. The Birmingham–Hoover ABCI was also expansionary with a mildly confident index of 51.9. The ABCIs for Huntsville, Tuscaloosa, and Montgomery were all below 50, as business leaders forecast worse economic conditions in both the statewide and national economies and the contraction of at least one of their industry indexes.

The Center for Business and Economic Research would like to thank the Alabama business executives who completed the second quarter 2025 ABCI™ survey. This is the 94th 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 2025.

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This report was produced in partnership between the Center for Business and Economic Research at the The University of Alabama’s Culverhouse College of Business and the Montgomery Chamber of Commerce.

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