| MMAC First Quarter Business Outlook Survey |
First Quarter Business Outlook Survey
Jan. 22, 2020 – Metro area businesses start 2020 with a strong expectation of growth, according to a quarterly business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC). Seventy-eight percent of businesses surveyed see sales increases in 2020, 75% forecast profit gains and 61% expect job growth in the calendar year.
“Local businesses are more optimistic now than one year ago on projected future sales and profit levels, suggesting an improving business environment in 2020,” said Bret Mayborne, MMAC’s economic research director. “Survey results suggest a modest start to the new year with upward momentum as the year moves forward.”
Seventy-eight percent of metro area businesses surveyed forecast higher real sales levels in 2020. Only 9% of businesses predict 2020 sales declines while 13% see no change. Those expecting 2020 sales increases rank higher than the 72% who forecast 2019 gains one year ago.
By industry, non-manufacturers are more likely to see 2020 sales gains than manufacturers. Eighty-two percent of non-manufacturers see sales increases for the new year, while only 9% see decreased sales levels. Conversely, 71% of manufacturers predict sales gains while 10% expect declines. By firm size, 80% of small employers (less than 100 employees) see 2020 sales gains vs. 75% among large employers.
A healthy profit picture is forecast by metro area businesses. Seventy-five percent of all employers surveyed see profit level increases in 2020. Ten percent see profit declines for the year and 15% expect no change. Those expecting profit growth in 2020 surpass the 65% who forecast 2019 profit gains one year ago.
Regarding capital spending plans, 51% of companies surveyed forecast a rise in capital expenditures for 2020. Fifteen percent see capital spending declines and 34% expect no change. The percentage currently predicting increases is up from the 42% who opened 2019 expecting capital spending gains.
Metro area employment growth in 2019 started out slow and ended strong, with the pace of growth over the course of the year pushing nonfarm jobs to record monthly highs on three different occasions. Survey results suggest more overall records are likely to follow in 2020. Sixty-one percent of all businesses surveyed expect job gains in their local workforces in 2020, outnumbering those predicting declines (3%) by a wide margin. Current results rank slightly lower than the 63% of companies that expected employment growth at the start of 2019.
By industry, the manufacturing sector registered weakness in 2019 with a small job decline likely for the year on average. Current expectations suggest a manufacturing rebound in 2020. Sixty-eight of manufacturers surveyed predict job growth in calendar year 2020, while none of those surveyed see employment decreases in the coming year.
Expectations in the non-manufacturing sector are less robust but nonetheless optimistic. A strong majority of non-manufacturers surveyed see job growth in 2020 with those seeing growth outnumbering those expecting declines by over a 10 to 1 margin (57% vs. 5%).
A strong job picture – record high employment levels and low unemployment rates – have yet to drive stronger expected wage and salary increases. Presently the average change in per person employee wages and salaries is forecast to rise 3.1% over the next 12 months, up marginally from the 3% annualized increase predicted three months ago.
Inflationary pressures remain moderate. Over half of companies surveyed (55%) see inflation falling in the 0% to 2% range while 39% expect price increases of 3% to 5%. Only 5% see price gains of 6% or higher.
Jan. 22, 2020 – Metro area businesses start 2020 with a strong expectation of growth, according to a quarterly business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC). Seventy-eight percent of businesses surveyed see sales increases in 2020, 75% forecast profit gains and 61% expect job growth in the calendar year.
“Local businesses are more optimistic now than one year ago on projected future sales and profit levels, suggesting an improving business environment in 2020,” said Bret Mayborne, MMAC’s economic research director. “Survey results suggest a modest start to the new year with upward momentum as the year moves forward.”
Seventy-eight percent of metro area businesses surveyed forecast higher real sales levels in 2020. Only 9% of businesses predict 2020 sales declines while 13% see no change. Those expecting 2020 sales increases rank higher than the 72% who forecast 2019 gains one year ago.
By industry, non-manufacturers are more likely to see 2020 sales gains than manufacturers. Eighty-two percent of non-manufacturers see sales increases for the new year, while only 9% see decreased sales levels. Conversely, 71% of manufacturers predict sales gains while 10% expect declines. By firm size, 80% of small employers (less than 100 employees) see 2020 sales gains vs. 75% among large employers.
A healthy profit picture is forecast by metro area businesses. Seventy-five percent of all employers surveyed see profit level increases in 2020. Ten percent see profit declines for the year and 15% expect no change. Those expecting profit growth in 2020 surpass the 65% who forecast 2019 profit gains one year ago.
Regarding capital spending plans, 51% of companies surveyed forecast a rise in capital expenditures for 2020. Fifteen percent see capital spending declines and 34% expect no change. The percentage currently predicting increases is up from the 42% who opened 2019 expecting capital spending gains.
Metro area employment growth in 2019 started out slow and ended strong, with the pace of growth over the course of the year pushing nonfarm jobs to record monthly highs on three different occasions. Survey results suggest more overall records are likely to follow in 2020. Sixty-one percent of all businesses surveyed expect job gains in their local workforces in 2020, outnumbering those predicting declines (3%) by a wide margin. Current results rank slightly lower than the 63% of companies that expected employment growth at the start of 2019.
By industry, the manufacturing sector registered weakness in 2019 with a small job decline likely for the year on average. Current expectations suggest a manufacturing rebound in 2020. Sixty-eight of manufacturers surveyed predict job growth in calendar year 2020, while none of those surveyed see employment decreases in the coming year.
Expectations in the non-manufacturing sector are less robust but nonetheless optimistic. A strong majority of non-manufacturers surveyed see job growth in 2020 with those seeing growth outnumbering those expecting declines by over a 10 to 1 margin (57% vs. 5%).
A strong job picture – record high employment levels and low unemployment rates – have yet to drive stronger expected wage and salary increases. Presently the average change in per person employee wages and salaries is forecast to rise 3.1% over the next 12 months, up marginally from the 3% annualized increase predicted three months ago.
Inflationary pressures remain moderate. Over half of companies surveyed (55%) see inflation falling in the 0% to 2% range while 39% expect price increases of 3% to 5%. Only 5% see price gains of 6% or higher.
First Quarter 2020 Expectations
Sales expectations for 2020’s first quarter rebounded from modest fourth-quarter 2019 results. Sixty-nine percent of those surveyed expect first-quarter sales gains (vs. 2019's first quarter), 14% see sales declines, and 17% expect no change. The current percentage predicting a quarterly sales increase is up from the 63% who forecast fourth-quarter, 2019 sales gains (vs. 2018’s fourth quarter) three months ago.
Likewise, a positive bounce was posted in first-quarter profit optimism. Sixty-eight percent of Milwaukee area businesses see higher profits for the first quarter (vs. year-ago levels), up from the 59% who forecast fourth-quarter, 2019 profit gains. Currently 14% predict profit declines while 18% see no change.
Forty-seven percent of all businesses surveyed predict first-quarter 2020 job gains for their local operations (vs. 2019’s first quarter), up from the 35% of companies which forecast year-over-year gains in 2019’s fourth quarter. Companies are over three times more likely to forecast employment gains for 2020’s first quarter than declines (13%). Forty-one percent see no change.
Manufacturers expressed modestly higher job expectations for 2020’s first quarter than non-manufacturers. Forty-eight percent of manufacturers surveyed see increased employment totals in 2020’s first quarter (vs. one-year ago), higher than the 45% of non-manufacturers who expect such gains.
In each case – sales, profits and employment – companies surveyed are somewhat less optimistic for 2020’s first quarter than they are for the calendar year in total. This suggests an expectation of an improving growth environment as the year moves forward.
The Business Outlook Survey, conducted by the MMAC, contains responses from 87 Milwaukee area firms, both large and small, employing more than 33,300 people.
Likewise, a positive bounce was posted in first-quarter profit optimism. Sixty-eight percent of Milwaukee area businesses see higher profits for the first quarter (vs. year-ago levels), up from the 59% who forecast fourth-quarter, 2019 profit gains. Currently 14% predict profit declines while 18% see no change.
Forty-seven percent of all businesses surveyed predict first-quarter 2020 job gains for their local operations (vs. 2019’s first quarter), up from the 35% of companies which forecast year-over-year gains in 2019’s fourth quarter. Companies are over three times more likely to forecast employment gains for 2020’s first quarter than declines (13%). Forty-one percent see no change.
Manufacturers expressed modestly higher job expectations for 2020’s first quarter than non-manufacturers. Forty-eight percent of manufacturers surveyed see increased employment totals in 2020’s first quarter (vs. one-year ago), higher than the 45% of non-manufacturers who expect such gains.
In each case – sales, profits and employment – companies surveyed are somewhat less optimistic for 2020’s first quarter than they are for the calendar year in total. This suggests an expectation of an improving growth environment as the year moves forward.
The Business Outlook Survey, conducted by the MMAC, contains responses from 87 Milwaukee area firms, both large and small, employing more than 33,300 people.