Yellowhammer State business leaders hold a negative view of the economy for the first time in eight years, according to a quarterly survey released Wednesday by the University of Alabama.
The UA Center for Business and Economic Research (CBER) took its latest Alabama Business Confidence Index (ABCI) in early June. The results showed that business leaders had a pessimistic outlook for the state and national economies. A positive indicator taken from the survey suggested moderate optimism for sales and hiring.
Susannah Robichaux, socioeconomic analyst for CBER, advised that the negative outlook likely stemmed from lingering issues related to the COVID-19 pandemic, global supply chain woes and foreign instability.
“This is likely due to the lasting effects of the pandemic on the local workforce, coupled with the prolonged difficulties with the global supply chain and international conflict that introduce a higher level of uncertainty to the economic environment,” said Robichaux in a release.
According to UA, the Alabama Business Confidence Index was 47.3. The figure represents a downward trend and is seven points below the previous quarter’s index. An index of more than 50 indicates a positive economic forecast.
The university advised that the index dropped every quarter since it peaked at 67 in the third quarter survey taken in June 2021, when Alabama saw the COVID-19 Delta variant case spike.
UA compiles index metrics from a wide variety of business executives across the state. The statewide and national forecasts, along with industry-specific components such as sales, profits, hiring and capital expenditures comprise the six indexes that combine to make the ABCI total.
The index suggests that business leaders hold a grimmer view of the U.S. economy. The national and state economies’ confidence indexes scored at 29.3 and 41.1, respectively.
CBER economists predicted earlier this year that Alabama’s economy would grow about 3% in 2022. However, that outlook projection has since been revised to 2.2% growth.
“The manufacturing sector was the lone sector of the nine industry groups surveyed with positive outlook for the third quarter, with healthcare and social assistance businesses reporting the lowest negative outlook despite that industry’s expectations for increased hiring,” UA’s release noted.
“Broken down by size, larger firms are slightly positive for their forecasts with growth expected across all industries. Smaller firms were milder in their confidence, but still anticipating growth,” the university added. “Mid-size firms, however, have quite a negative outlook compared to their counterparts, forecasting decreased profits and capital expenditures in addition to their strongly negative expectations for the Alabama and U.S. economies.”
The breakdown of all the industry forecasts by sector can be viewed here. Individual reports for Alabama’s five major metro areas can be accessed here.
Dylan Smith is a staff writer for Yellowhammer News. You can follow him on Twitter @DylanSmithAL
