Southeastern Wisconsin businesses are expressing strong confidence that business growth will continue in the year’s second quarter, according to the latest Business Outlook Survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC).
Seventy-six percent of businesses surveyed expect sales increases in the second quarter, 71 percent expect profit gains and 59 percent predict employment growth over year-ago levels.
“Outlook levels remain at high points in the post-recessionary period,” said Bret Mayborne, the MMAC’s economic research director. “The current levels of optimism expressed on sales, profit and employment have each matched or exceeded levels posted before the recession. The post-recession period in the Milwaukee area has been one of modest but consistent gains. As a result it has taken a bit of time to get back to pre-recession levels. The second quarter outlook survey results suggest that as far as business confidence is concerned we have largely bridged the gap. The high level of business optimism and the overall upward trend in the local economy perhaps suggest a greater likelihood of accelerated future growth built on a solid foundation.”
A large majority of area businesses see real, year-over-year sales gains in 2015’s second quarter. More than three-quarters of those survey (76 percent) forecast second-quarter sales gains while only 10 percent see declines. The remainder (14 percent) see no change. Current expectations mark a modest increase from 2015’s first quarter when 75 percent saw increases and match the highest level of quarterly sales optimism posted in nine years (since 2006’s second quarter).
Manufacturers and non-manufacturers have similar sales expectations. Seventy-eight percent of non-manufacturers see real second-quarter sales gains (vs. year-ago levels), while 74 percent of manufacturers see such increases. By size, large employers (100 or more employees) are more optimistic than small employers (82 percent see sales increases vs. 71 percent respectively).
Profit expectations ticked upward. Seventy-one percent of all surveyed expect profit increases for the second quarter (vs. year-ago levels), up marginally from the 70 percent who forecast first quarter profit gains. Current profit optimism matches the highest level reached since 1998’s second-quarter.
Employment in the metro area has maintained a steady, albeit modest upward trend. Through February, jobs in the metro area have posted 53 consecutive months of year-over-year growth. Yet employment gains over the last six months have averaged a bit under 1 percent – smaller than the average increase registered over the last two years (up 1.3 percent).
Job gains are likely to continue into the year’s second quarter. Fifty-nine percent of all employers surveyed see higher second-quarter job levels (vs. one-year ago), outnumbering those predicting job declines (9 percent) by more than a six-to-one margin. Thirty-two percent see no change in future job levels.
Manufacturers are more likely to see employment gains than non-manufacturers. Sixty-five percent of manufacturers expect second-quarter gains vs. 54 percent among non-manufacturers. The same split was registered for large employers (100 or more employees) vs. small employers – 65 percent of large employers see growth vs. 54 percent among small employers.
Modest job growth levels may be contributing to restrained wage and salary gains. Employers expect per employee wages and salaries to increase by 2.3 percent over the next 12 months, down from the 2.6 percent annual increase forecast three months ago.
Sales forecasts for 2015 as a whole continue at a healthy level, matching those expressed at the beginning of the year. In both 2015’s first and second quarter, 83 percent of all surveyed project rising real sales levels for the year as a whole. Currently only 5 percent forecast a yearly sales decline while 12 percent see no change.
The Business Outlook Survey conducted by the MMAC, contains responses from 102 Milwaukee area firms, both large and small, employing more than 38,500 people.
