Although many southeastern Wisconsin business executives fear an economic downturn in the wake of hurricane Katrina, a lackluster stock market and rising energy costs, most seem to believe their own companies will continue to prosper in the fourth quarter.
The Metropolitan Milwaukee Association of Commerce’s (MMAC) Business Outlook Survey for the quarter shows that 74 percent of the businesses surveyed expect sales increases in the final months of 2005, even though many businesses are skeptical about the macroeconomic outlook for the United States.
"Expectations among metro area businesses suggest ongoing gains in local business activity levels through the remainder of 2005 and into 2006," said Bret Mayborne, the MMAC’s economic research director. "Surveyed manufacturers in the metro area are more likely to predict improving sales, profit and employment levels for the coming quarter than those non-manufacturers polled."
Showing this optimism, Mayborne noted that businesses predicting employment gains outnumber those predicting declines by more than a five-to-one margin.
According to the survey results, the local economy is doing well, unless businesses’ perceptions of their own earning potentials are misguided.
Although the MMAC survey was conducted before Katrina’s devastation was fully known, Mayborne believes the responses "wouldn’t have changed much over the past three or four weeks."
He added that the predicted economic growth is "a continuation of what we’ve seen over the better part of now almost a full calendar year, although growth may become more tempered over time."
Only 6 percent of the companies surveyed are predicting sales declines in the final quarter.
According to Mayborne, manufacturers are even more optimistic about the fourth quarter, with 80 percent predicting sales gains and only 4 percent predicting declines.
However, a discrepancy exists between the levels of optimism among large and small companies. Mayborne notes that 79 percent of large companies (100 or more employees) surveyed foresee fourth-quarter sales gains, while only 68 percent of small companies expect gains.
The MMAC survey also shows good news for the job market. Thus far during 2005, non-farm job levels have grown at a 1.1 percent pace.
The survey reveals that 79 percent of companies surveyed predicted better real sales levels in 2005 than they had forecast for 2004.
The respondents’ estimations for 2006 are positive, as well, with 78 percent of companies anticipating increased sales next year.
The average forecasted change in employee wages and salaries is 3.1 percent over the next 12 months, according to the survey.
Editor’s note:
The Metropolitan Milwaukee Association of Commerce (MMAC) Business Outlook Survey contains responses from 126 Milwaukee area firms, employing more than 73,000 people. The survey is first reported exclusively in Small Business Times and then mailed to MMAC members and other publications.
