Fourth Quarter, 2013

For further information contact Economic Research Director BRET MAYBORNE at (414) 287.4122

>>View PDF of full report.October 16, 2013 – 

Business confidence in future growth prospects turned downward in 2013’s fourth quarter, according to a business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce. While the majority of companies surveyed see fourth-quarter gains in sales and profits, the percentages rank lower than posted in 2013’s third quarter.

"The results of the MMAC’s fourth-quarter survey send somewhat mixed results," said Bret Mayborne, the MMAC’s economic research director. "After building momentum in the previous two quarters, business confidence turned downward in 2013’s fourth quarter. At the same time businesses surveyed expressed confidence that growth will continue into the 2014 calendar year."

"After building momentum in the previous two quarters, business confidence turned downward in 2013's fourth quarter.  At the same time, businesses surveyed expressed confidence that growth will continue into the 2014 calendar year."

Bret Mayborne
MMAC Director
of Economic Research


Those firms expecting real sales increases posted a noticeable drop in the fourth quarter, down nine percentage points from third-quarter levels. Decreasing optimism was also registered in profit and employment expectations but at a less dramatic pace. The percentage forecasting profit and employment increases for the quarter were each down four percentage points respectively from third-quarter levels.

Fifty-eight percent of all businesses surveyed see real sales gains in 2013’s fourth quarter (vs. year-ago levels). Sixteen percent predict fourth-quarter sales declines (vs. 2012's fourth quarter) while 26% expect no change. The percentage forecasting quarterly sales gains (vs. year-ago levels) is down from the 67% who forecast third-quarter gains and follows consecutive quarters of improving optimism.

Fourth-quarter sales expectations differ somewhat by firm size. Large firms are more likely to predict real sales gains than small companies. Sixty-three percent of large companies (100 or more employees) surveyed see fourth-quarter sales gains (vs. 2012’s fourth quarter) compared to 54% among small firms. Differences by industry were small. Fifty-nine percent of manufacturers see fourth-quarter sales gains (vs. 2012's fourth quarter), while 57% of non-manufacturers predict such increases.  


Lower profit expectations also were registered. Fifty-six percent of all surveyed businesses predict fourth-quarter profit gains (vs. 2012’s fourth quarter), four percentage points lower than the 60% who saw third-quarter increases (vs. year-ago levels). Currently, 18% see profit declines in 2013’s fourth-quarter and 26% see no change.

The job situation in the metro area has improved in recent months. Over the June-to-August period (latest available three month period) the pace of year-over-year job growth was more than double that posted in the previous three month period. Further, on an industry level, employment growth has broadened with seven of ten major industry sectors recording year-over-year employment growth through 2013’s first eight months.

Survey results suggest a rather tepid job market going forward. The largest number of those surveyed see fourth-quarter job levels holding steady (42%), but companies seeing fourth-quarter job increases still outnumbering those expecting declines by nearly a two-to-one margin (38%

see job increases, 20% declines). Like sales and profit expectations, the current percentage forecasting employment gains ranks below third-quarter levels when 42% saw job increases.

Little variation was posted in job expectations by industry. Thirty-seven percent of manufacturers forecast fourth-quarter job increases (vs. year-ago levels) vs. 38% for surveyed non-manufacturers. But large companies surveyed are more likely to expect fourth-quarter employment gains (vs. 2012’s fourth quarter) than small employers (44% see job gains for larger employers vs. 32% for smaller employers).

A modest upward trend has been registered in wage and salary growth. Employers project an average annual increase of 2.3% in per employee wages and salaries over the next 12 months.

The forecast average is up from the 2.2% rise projected three months ago and the 2% increase predicted in 2012’s fourth-quarter survey.

Calendar Year 2013 Expectations
Calendar year sales expectations moved noticeably downward in 2013’s fourth quarter. With only one quarter remaining, 57% of businesses surveyed predict rising real sales levels for 2013 as a whole. This forecast is down from the 66% who saw 2013 calendar year sales gains three months ago and marks the weakest level of optimism expressed since 2010’s first quarter. Currently 21% of businesses expect sales declines for the year as a whole, while 22% predict no change.

Metro area businesses gave their first look at expectations for the 2014 calendar year in this survey. Sixty-eight percent of metro area businesses see real sales gains in 2014 (vs. 2013) while only 6% project declines. The remaining 26% see no change. Expectations for 2014 rank higher than the initial forecast for 2013. Twelve months ago, 65% of survey respondents forecast sales gains for the forthcoming calendar year (2013).

Manufacturers were more likely to see 2014 sales increases than non-manufacturers. Seventy-three percent of manufacturers expect gains for the year vs. 63% among non-manufacturers. The split for large vs. small employers was more evenly distributed – 66% of large employers see real sales gains in 2014 vs. 70% for small employers.

The Business Outlook Survey, conducted by the MMAC, contains responses from 131 Milwaukee area firms, both large and small, employing more than 54,100 people.