| Third quarter business outlook survey |
Third-Quarter Business Outlook Survey
July 23, 2018 – Businesses expect continued, broad-based gains in metro area business activity in 2018’s third quarter, according to a business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC). Seventy-four percent of businesses surveyed see rising real sales levels in 2018’s third quarter (vs. year ago levels), sixty-eight percent expect profit increases while over half see employment gains.
“Solid levels of optimism were expressed by area companies, both for the third-quarter and for 2018 as a whole,” said Bret Mayborne, the MMAC’s economic research director. “Over the course of 2018’s first five months, the metro area’s overall job trend showed marked improvement, particularly in manufacturing. Survey results suggest that local businesses expect this trend to continue into the third quarter and beyond.”
Quarterly optimism improved modestly from 2018’s second quarter to its third quarter on sales and profits. Seventy-four percent of all businesses surveyed predict third-quarter real sales gains (vs. year-ago levels), up from the 71% predicting second-quarter increases three months ago. Currently only 6% of those surveyed see third-quarter sales declines (vs. year-ago levels) and 19% see no change.
Large employers and manufacturers expressed greater levels of optimism than their counterparts on quarterly sales levels. Eighty-five percent of manufacturers see third-quarter sales gains (vs. 2017's third quarter), while 68% of non-manufacturers see such increases. By employment size, 82% of large companies (100 or more employees) surveyed see third-quarter sales gains vs. 70% among small employers.
Businesses view on profits followed a similar path. Profit expectations rose modestly from the 66% seeing improved second-quarter profits, to the 68% expecting third-quarter gains. Presently, nine percent forecast profit declines and 23% see no change in future profit levels.
Metro area employment growth has improved in recent months. Over 2018’s first five months, job gains have averaged 0.9% year-over-year, up from the 0.3% average gain registered throughout 2017. Manufacturing job gains have been particularly strong in 2018 with a five month, year-over-year average of 2.3%.
Survey results suggest job gains will continue into 2018’s third quarter. Fifty-seven percent of businesses see third-quarter job gains over year-ago levels, strongly outnumbering those expecting declines (2%), with the balance seeing no change (41%). While the percentage seeing job increases is down somewhat from second-quarter expectations, it remains at the high end of the range of optimism expressed in the current expansionary period.
July 23, 2018 – Businesses expect continued, broad-based gains in metro area business activity in 2018’s third quarter, according to a business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC). Seventy-four percent of businesses surveyed see rising real sales levels in 2018’s third quarter (vs. year ago levels), sixty-eight percent expect profit increases while over half see employment gains.
“Solid levels of optimism were expressed by area companies, both for the third-quarter and for 2018 as a whole,” said Bret Mayborne, the MMAC’s economic research director. “Over the course of 2018’s first five months, the metro area’s overall job trend showed marked improvement, particularly in manufacturing. Survey results suggest that local businesses expect this trend to continue into the third quarter and beyond.”
Quarterly optimism improved modestly from 2018’s second quarter to its third quarter on sales and profits. Seventy-four percent of all businesses surveyed predict third-quarter real sales gains (vs. year-ago levels), up from the 71% predicting second-quarter increases three months ago. Currently only 6% of those surveyed see third-quarter sales declines (vs. year-ago levels) and 19% see no change.
Large employers and manufacturers expressed greater levels of optimism than their counterparts on quarterly sales levels. Eighty-five percent of manufacturers see third-quarter sales gains (vs. 2017's third quarter), while 68% of non-manufacturers see such increases. By employment size, 82% of large companies (100 or more employees) surveyed see third-quarter sales gains vs. 70% among small employers.
Businesses view on profits followed a similar path. Profit expectations rose modestly from the 66% seeing improved second-quarter profits, to the 68% expecting third-quarter gains. Presently, nine percent forecast profit declines and 23% see no change in future profit levels.
Metro area employment growth has improved in recent months. Over 2018’s first five months, job gains have averaged 0.9% year-over-year, up from the 0.3% average gain registered throughout 2017. Manufacturing job gains have been particularly strong in 2018 with a five month, year-over-year average of 2.3%.
Survey results suggest job gains will continue into 2018’s third quarter. Fifty-seven percent of businesses see third-quarter job gains over year-ago levels, strongly outnumbering those expecting declines (2%), with the balance seeing no change (41%). While the percentage seeing job increases is down somewhat from second-quarter expectations, it remains at the high end of the range of optimism expressed in the current expansionary period.
Calendar Year 2018 Expectations
At mid-year, a strong majority of metro area businesses see growth in sales, profits and employment for 2018 as a whole. Six months into the year, calendar expectations are only marginally different from those expressed at 2018’s start.
For sales, 81% of all businesses surveyed see real sales increases in 2018 vs. 2017. A very small number (3%) see real declines, while 16% see no change from 2017 levels. Expectations closely match those expressed at the beginning of 2018 when 80% of those surveyed predicated 2018 sales increases.
A healthy profit position is predicted for 2018 with businesses expecting profit gains outnumbering those seeing declines by over a seven-to-one margin. Seventy-two percent see profit increases over year-ago levels vs. the 10% who predict declines. Profit expectations were modestly higher at the beginning of the year when 75% of businesses saw profit increases.
Job expectations toward 2018 remain at a high level. Sixty-eight percent of employers surveyed expect employment increases in local operations for the year while only 2% see job declines. Thirty percent expect no change in annual employment levels. Large employers and manufacturers were somewhat more likely to forecast 2018 job gains than their counterparts.
Over half of all businesses surveyed see increased capital spending for the year. Fifty-eight percent of employers see annual capital expenditure increases in 2018, while 30% see no change. Only 11% expect capital spending declines for the year. The current percentage seeing increases is modestly higher than the 53% who predicted capital expenditure gains at the beginning of 2018.
While there is a limited number of businesses expecting renewed inflationary pressures, survey results suggest the vast majority expect inflation to remain under control. The majority (51%) see inflation falling in the 3% to 5% range while 36% see inflation of 0% to 2%. Only 13% see inflation of 6% or higher, but this percentage is up from the 8% who forecast such gains six months ago.
Expectations toward wage and salary increases ticked slightly downward. A 3.5% increase in per employee wages and salaries is projected over the next 12 months, slightly lower than the 3.6% increase forecast three months ago.
The Business Outlook Survey, conducted by the MMAC, contains responses from 98 Milwaukee area firms, both large and small, employing more than 35,900 people.
For sales, 81% of all businesses surveyed see real sales increases in 2018 vs. 2017. A very small number (3%) see real declines, while 16% see no change from 2017 levels. Expectations closely match those expressed at the beginning of 2018 when 80% of those surveyed predicated 2018 sales increases.
A healthy profit position is predicted for 2018 with businesses expecting profit gains outnumbering those seeing declines by over a seven-to-one margin. Seventy-two percent see profit increases over year-ago levels vs. the 10% who predict declines. Profit expectations were modestly higher at the beginning of the year when 75% of businesses saw profit increases.
Job expectations toward 2018 remain at a high level. Sixty-eight percent of employers surveyed expect employment increases in local operations for the year while only 2% see job declines. Thirty percent expect no change in annual employment levels. Large employers and manufacturers were somewhat more likely to forecast 2018 job gains than their counterparts.
Over half of all businesses surveyed see increased capital spending for the year. Fifty-eight percent of employers see annual capital expenditure increases in 2018, while 30% see no change. Only 11% expect capital spending declines for the year. The current percentage seeing increases is modestly higher than the 53% who predicted capital expenditure gains at the beginning of 2018.
While there is a limited number of businesses expecting renewed inflationary pressures, survey results suggest the vast majority expect inflation to remain under control. The majority (51%) see inflation falling in the 3% to 5% range while 36% see inflation of 0% to 2%. Only 13% see inflation of 6% or higher, but this percentage is up from the 8% who forecast such gains six months ago.
Expectations toward wage and salary increases ticked slightly downward. A 3.5% increase in per employee wages and salaries is projected over the next 12 months, slightly lower than the 3.6% increase forecast three months ago.
The Business Outlook Survey, conducted by the MMAC, contains responses from 98 Milwaukee area firms, both large and small, employing more than 35,900 people.