Montgomery Metro Area Report

Alabama Business Confidence Index™

Second Quarter 2024

Contractionary Forecast in Q2 2024

Business confidence in the Montgomery metro area decreased by 5.8 points to reach a mildly contractionary 46.1 in the Q2 2024 ABCI survey. This index signals expectations for an overall decrease in economic activity compared to last quarter. Each of the component indexes decreased by at least five points in the Q2 2024 survey, except for the sales index, which remained mildly expansionary. From Q1 to Q2 2024, the US outlook returned to its strongly contractionary levels; the AL economy component index fell from moderately expansionary to mildly contractionary; and the forecast for industry profits, hiring, and capital spending dropped from mildly expansionary to mildly contractionary levels.

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: The Alabama outlook fell 7.1 points to reach a mildly contractionary 48.3 in the Q2 2024 survey.
• US Economy: Sixty percent of Montgomery business leaders are forecasting a contraction in the U.S. economy in Q2 2024 compared to last quarter, resulting in a strongly contractionary index of 36.7 for Q2 2024. This is an 11.5-point decrease from Q1 2024’s level.
• Industry Sales: Montgomery’s industry sales index was the metro’s only expansionary forecast in Q2 2024 with a mildly confident index of 51.7 after decreasing only 0.1 points from last quarter.
• Industry Profits: The metro’s profits index decreased 5.1 points in the Q2 2024 survey to reach a mildly contractionary 46.7.
• Industry Hiring: The metro’s hiring index registered as moderately contractionary in Q2 2024 at 45.0 after decreasing 5.9 points from last quarter. This is the lowest that Montgomery’s hiring index has been in the last four years, with expansionary or neutral forecasts each quarter except in Q3 2020.
• Industry Capital Expenditures: The index for industry capital expenditures was a mildly contractionary 48.3 after decreasing 5.3 points in the Q2 2024 survey.

ABCI Montgomery in Context

Montgomery’s ABCI reached a historic high of 70.6 in Q3 2021 before falling back to more moderate and mild expansionary forecasts through Q2 2022. Then, in Q3 2022, the metro forecasted a decrease in economic activity compared to the previous quarter for the first time since 2019 as panelists decreased their confidence in their industry growth as well as forecast worse statewide and national conditions. Montgomery’s ABCI remained contractionary until five quarters later, when the index registered as mildly expansionary for two quarters in Q4 2023 and Q1 2024 due to more favorable outlooks for the industry component indexes. In the Q2 2024 survey, five of the six component indexes are below 50 resulting in an overall mildly contractionary ABCI.

Business confidence across Alabama’s metro areas is mostly positive in Q2 2024, with business leaders in all but Montgomery forecasting growth compared to the previous quarter. Tuscaloosa had the highest metro ABCI with a moderately confident 57.1, followed closely by Huntsville with 55.1. Panelists in Birmingham–Hoover and Mobile had mildly confident expansionary forecasts of 53.5 and 52.8, respectively. Montgomery, who had the highest MSA ABCI last quarter at a mildly positive 51.9, dropped almost 6 points to a mildly negative index of 46.1.

The Center for Business and Economic Research would like to thank the Alabama business executives who completed the second quarter 2024 ABCI™ survey. This is the 90th 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 2024.

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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.