Businesses in the metro Milwaukee area see continuing gains in key growth indicators for 2007, according to the new first-quarter Business Outlook Survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC). The metro area finished 2006 with a solid job trend. The local area has posted seven consecutive months of year-over-year job gains and is likely to post overall annual employment gains for the third consecutive year. Survey results for 2007 suggest gains are likely to continue. Fifty-nine percent of all those surveyed expect increases in their local workforces in 2007, outnumbering those predicting declines (5 percent) by nearly a 12-to-1 margin. Thirty-six percent see no change.
Non-manufacturers were more optimistic toward future job levels than manufacturers.
Currently, 61 percent of non-manufacturers predict job increases during the calendar year 2007, while 55 percent of manufacturers see job gains.
“The results of the MMAC’s Business Outlook Survey suggest ongoing improvements in the metro area economic environment,” said Bret Mayborne, MMAC’s economic research director. “Of particular note was the very small percentage of employers forecasting job declines for the year, a strong sign that job levels are likely to rise for the third consecutive year.”
Seventy-eight percent of businesses surveyed see sales increases in 2007, 65 percent predict profit gains and 59 percent expect employment growth for their local operations.
Only 4 percent predict sales declines for their companies. The proportion predicting 2007 sales growth (78 percent) matches those who predicted 2006 sales increases for that year as a whole.
Yearly sales optimism among manufacturers is strong. Eighty percent of manufacturers surveyed predict sales growth in 2007, vs. 77 percent among non-manufacturers. By company size, larger employers (100 or more employees) are slightly more likely to forecast 2007 sales gains than smaller employers (81 percent vs. 76 percent, respectively).
Profit expectations were down from those expressed one year ago. Sixty-five percent of all employers surveyed forecast higher profit levels in 2007 (vs. 2006), down from the 74 percent who forecast profit gain in 2006. Manufacturers are less optimistic toward an improving profit picture than non-manufacturers.
Regarding capital spending plans, 46 percent of all companies surveyed forecast a rise in capital expenditures for the year. Twelve percent see capital spending declines, and 43 percent expect no change.
Wage and salary expectations have pushed upward as job gains have stabilized. The average change in per-person employee wages and salaries is forecast to rise 3.5 percent over the next 12 months, up from the 3.2 percent annualized increases predicted both three months and one year ago.
Moderate inflationary pressures are expected in 2007. Seventeen percent of all companies surveyed see inflation falling in the 0 to 2 percent range, while the largest number (77 percent) expect price increases of 3 to 5 percent. Only six percent predict price gains of 6 percent or higher, down from the 11 percent who predicted such inflationary increases one year ago.
Businesses are somewhat more reserved in their optimism toward 2007’s first quarter. While 78 percent of those surveyed predict sales increases for 2007 as a whole, 72 percent expect first-quarter sales gains (vs. 2006’s first quarter).
The Business Outlook Survey, conducted by the MMAC, contains responses from 112 Milwaukee area firms, both large and small, employing more than 66,500 people.
