| Fourth quarter MMAC business outlook survey |
Fourth Quarter Business Outlook Survey
October 11, 2019 – Business confidence in the metro area’s economy weakened in 2019’s fourth quarter, according to a business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce. A markedly smaller number of companies surveyed see fourth-quarter gains in sales, profits and employment than those expressed in 2019’s third quarter survey.
“The survey outlook suggests slower business growth in 2019’s final three months and pushing into 2020,” said Bret Mayborne, the MMAC’s economic research director. “To some extent this trend has already shown itself in an uneven metro area employment situation and an overall weakening of the current manufacturing trend. With that said, there have been lower expectations recorded during the recovery period, suggesting that a slowdown is more likely than actual economic declines.”
Sixty-three percent of all businesses surveyed see real sales gains in 2019’s fourth quarter (vs. year-ago levels). Fifteen percent predict fourth-quarter sales declines (vs. 2018's fourth quarter) while 21% expect no change.
Those firms expecting real sales increases posted a sharp drop in the fourth quarter. The percentage forecasting quarterly sales gains (vs. year-ago levels) is down from the 77% who forecast third-quarter gains, down 14 percentage points from third-quarter levels. By firm size, smaller companies have greater confidence in fourth-quarter sales increases than large companies. Sixty-seven percent of small companies (less than 100 employees) surveyed see fourth-quarter sales gains (vs. 2018’s fourth quarter) compared to 60% among large firms. By industry, 66% of manufacturers see fourth-quarter sales gains (vs. 2018's fourth quarter), while 62% of non-manufacturers predict such increases.
Profit expectations have been erratic in 2019. Fifty-nine percent of all surveyed businesses see fourth-quarter profit gains (vs. 2018’s fourth quarter) lower than the 69% of respondents who predicted third-quarter increases, but slightly higher than expectations expressed in 2019’s first and second-quarter quarters. Currently, 20% see profit declines in 2019’s fourth-quarter and 21% see no change.
The employment situation is a bit mixed at present. Nonfarm employment levels in metro Milwaukee reached an all-time high in June (889,500) but year-over-year growth fell to 0.5% in August. The metro area’s unemployment rate, while low historically, has started to tick modestly upward. At present it is difficult to see a well-defined local employment trend.
Expectations toward future job growth are tempered with a majority (52%) of those surveyed seeing no change in fourth-quarter job levels. Thirty-five percent see fourth-quarter employment growth over year-ago levels, the smallest percentage of companies seeing job gains since 2010’s fourth quarter. Nonetheless, those expecting job gains outnumber those expecting declines by over a two-to-one margin (13% see job declines). The current percentage forecasting employment gains is down from the 57% who forecast job increases in 2019’s third quarter.
Differences by industry or company size were rather modest. Non-manufacturers are marginally more likely to forecast job gains than manufacturers – with 37% of non-manufacturer seeing fourth-quarter gains vs. 32% for manufacturers. By firm size, 36% of large companies surveyed expect fourth-quarter employment gains (vs. 2018’s fourth quarter) compared to 33% for small employers.
Wage and salary expectations turned downward in 2019’s fourth quarter. Employers project an average annual increase of 3% in per employee wages and salaries over the next 12 months. The forecast average is down from the 3.5% rise projected three months ago and the 3.4% increase predicted in 2018’s fourth-quarter survey.
Employers revised calendar year sales expectations downward in 2019’s fourth quarter. With only one quarter remaining, 69% of businesses surveyed predict rising real sales levels for 2019 as a whole. This forecast is down from the 77% who saw 2019 calendar year sales gains three months ago and marks the weakest level of full-year optimism expressed since 2016’s third quarter. Currently 16% of businesses expect sales declines for 2019 as a whole, while 14% predict no change.
October 11, 2019 – Business confidence in the metro area’s economy weakened in 2019’s fourth quarter, according to a business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce. A markedly smaller number of companies surveyed see fourth-quarter gains in sales, profits and employment than those expressed in 2019’s third quarter survey.
“The survey outlook suggests slower business growth in 2019’s final three months and pushing into 2020,” said Bret Mayborne, the MMAC’s economic research director. “To some extent this trend has already shown itself in an uneven metro area employment situation and an overall weakening of the current manufacturing trend. With that said, there have been lower expectations recorded during the recovery period, suggesting that a slowdown is more likely than actual economic declines.”
Sixty-three percent of all businesses surveyed see real sales gains in 2019’s fourth quarter (vs. year-ago levels). Fifteen percent predict fourth-quarter sales declines (vs. 2018's fourth quarter) while 21% expect no change.
Those firms expecting real sales increases posted a sharp drop in the fourth quarter. The percentage forecasting quarterly sales gains (vs. year-ago levels) is down from the 77% who forecast third-quarter gains, down 14 percentage points from third-quarter levels. By firm size, smaller companies have greater confidence in fourth-quarter sales increases than large companies. Sixty-seven percent of small companies (less than 100 employees) surveyed see fourth-quarter sales gains (vs. 2018’s fourth quarter) compared to 60% among large firms. By industry, 66% of manufacturers see fourth-quarter sales gains (vs. 2018's fourth quarter), while 62% of non-manufacturers predict such increases.
Profit expectations have been erratic in 2019. Fifty-nine percent of all surveyed businesses see fourth-quarter profit gains (vs. 2018’s fourth quarter) lower than the 69% of respondents who predicted third-quarter increases, but slightly higher than expectations expressed in 2019’s first and second-quarter quarters. Currently, 20% see profit declines in 2019’s fourth-quarter and 21% see no change.
The employment situation is a bit mixed at present. Nonfarm employment levels in metro Milwaukee reached an all-time high in June (889,500) but year-over-year growth fell to 0.5% in August. The metro area’s unemployment rate, while low historically, has started to tick modestly upward. At present it is difficult to see a well-defined local employment trend.
Expectations toward future job growth are tempered with a majority (52%) of those surveyed seeing no change in fourth-quarter job levels. Thirty-five percent see fourth-quarter employment growth over year-ago levels, the smallest percentage of companies seeing job gains since 2010’s fourth quarter. Nonetheless, those expecting job gains outnumber those expecting declines by over a two-to-one margin (13% see job declines). The current percentage forecasting employment gains is down from the 57% who forecast job increases in 2019’s third quarter.
Differences by industry or company size were rather modest. Non-manufacturers are marginally more likely to forecast job gains than manufacturers – with 37% of non-manufacturer seeing fourth-quarter gains vs. 32% for manufacturers. By firm size, 36% of large companies surveyed expect fourth-quarter employment gains (vs. 2018’s fourth quarter) compared to 33% for small employers.
Wage and salary expectations turned downward in 2019’s fourth quarter. Employers project an average annual increase of 3% in per employee wages and salaries over the next 12 months. The forecast average is down from the 3.5% rise projected three months ago and the 3.4% increase predicted in 2018’s fourth-quarter survey.
Employers revised calendar year sales expectations downward in 2019’s fourth quarter. With only one quarter remaining, 69% of businesses surveyed predict rising real sales levels for 2019 as a whole. This forecast is down from the 77% who saw 2019 calendar year sales gains three months ago and marks the weakest level of full-year optimism expressed since 2016’s third quarter. Currently 16% of businesses expect sales declines for 2019 as a whole, while 14% predict no change.
Calendar Year 2020 Expectations
Metro area businesses gave their first look at expectations for the 2020 calendar year in this survey. Sixty-eight percent of metro area businesses see real sales gains in 2020 (vs. 2019) while 8% project declines. The remaining 24% see no change. Expectations for 2020 rank lower than the initial forecast for 2019. Twelve months ago, 79% of survey respondents forecast sales gains for the forthcoming calendar year (2019).
Comparatively, manufacturers expressed a higher level of optimism toward 2020. Eighty percent of manufacturers expect real sales gains for the year vs. 60% among non-manufacturers. Both large vs. small employers see similar sales trends in 2020. Sixty-eight percent of large employers see real sales gains in 2020 vs. 69% for small employers.
The Business Outlook Survey, conducted by the MMAC, contains responses from 104 Milwaukee area firms, both large and small, employing more than 44,900 people.
Comparatively, manufacturers expressed a higher level of optimism toward 2020. Eighty percent of manufacturers expect real sales gains for the year vs. 60% among non-manufacturers. Both large vs. small employers see similar sales trends in 2020. Sixty-eight percent of large employers see real sales gains in 2020 vs. 69% for small employers.
The Business Outlook Survey, conducted by the MMAC, contains responses from 104 Milwaukee area firms, both large and small, employing more than 44,900 people.