Area businesses are expecting a soft landing during the second half of 2007, according to the third quarter business outlook survey by the Metropolitan Milwaukee Association of Commerce (MMAC). Seventy-one percent of surveyed businesses expect rising real sales levels for the third quarter, compared with last year’s third quarter. Only 9 percent expect declines in third-quarter sales levels and 20 percent expect no change.
Sixty-three percent of all business surveyed expect increases in third quarter profit levels, compared to year ago levels, 15 percent expect third quarter profit declines and 21 percent expect no change. More businesses are optimistic about profit levels this year than at they were at the beginning of the year. Sixty eight percent expect profit increases for all of 2007, compared to 65 percent of those surveyed at the beginning of the year.
“For the most part, metro area businesses are optimistic toward 2007’s third quarter where expectations among area businesses either improved somewhat or held steady from three months earlier,” said Bret Mayborne, research director for the MMAC.
Most businesses surveyed expect to hire more people for their local operations. Fifty five percent forecasted third-quarter employment gains compared to year-ago levels, 11 percent expect job cuts.
“Despite the sluggish job trend of 2007’s first half, survey results suggest continuing employment growth in future months,” Mayborne said.
The MMAC’s business outlook survey contains responses from 106 Milwaukee area firms, both large and small, employing more than 58,200 people. The MMAC provides exclusive first glimpses of its quarterly surveys to readers of Small Business Times.
Non-manufacturers and larger employers are more confident of improving third-quarter sales levels than manufacturers and small businesses are. Seventy-five percent of non-manufacturers expect third quarter sales gains, while 63 percent of manufacturers expect sales increases. Seventy-three percent of large companies expect third quarter sales gains, compared to 69 percent of small companies.
In addition, more non-manufacturers forecasted third-quarter employment gains than manufactures did. Fifty-six percent of non-manufacturers expect to add employees, compared to 53 percent of manufacturers. More manufacturers, 18 percent, expect job cuts for the quarter compared to non-manufacturers, seven percent.
The surveyed businesses are projecting an average 3.3 percent pay increase per employee over the next 12 months. Manufacturers are projecting a 2.7 percent pay increase, non-manufacturers project a 3.7 percent pay increase, large employers are projecting a 3.1 percent pay increase and small employers project a 3.5 percent pay increase.
Almost half (46 percent) of the surveyed businesses say they expect to increase their capital spending this year, while 36 percent expect no change in capital spending this year and 18 percent expect their capital spending to decline this year.
