Most employers in the Milwaukee area expect their companies to finish off the year in strong fashion, according to the fourth quarter Business Outlook Survey by the Metropolitan Milwaukee Association of Commerce.
Sixty-nine percent of businesses surveyed foresee rising real sales levels in the fourth quarter (versus year ago levels), and a majority (52 percent) forecast employment gains for their local operations.
“Sales and profit expectations for the fourth quarter dipped marginally from those expressed for 2014’s third quarter, but overall levels of business optimism remain healthy,” said Bret Mayborne, the MMAC’s economic research director. “Fourth-quarter employment optimism ranked strong, particularly among local manufacturers, where nearly two-thirds of those surveyed see fourth-quarter, year-over-year job gains.
“The economic trend seems to have generated some momentum in recent months, particularly as it relates to employment. The rate of job growth in the metro area is at a post-recession high point and survey expectations suggest that strong employment growth is likely to continue through the remainder of 2014,” Mayborne said.
Like quarterly sales expectations, profit expectations fell short of third-quarter levels, but 61 percent of all businesses surveyed see increases in fourth-quarter profit levels (vs. year ago levels). Fourteen percent see declines in fourth-quarter profits, while 25 percent expect no change.
Job gains in the metro area have strengthened significantly in recent months. After year-over-year growth averaged less than 1 percent over 2014’s first three months, gains have averaged more than 2.5 percent in the most recent three-month period available (June-July-August). Furthermore, job growth has broadened with seven of 10 major industry sectors now contributing to metro area job growth.
Survey results suggest that Milwaukee may be poised to build on this strengthening employment trend. More than half (52 percent) of all businesses surveyed expect fourth quarter employment levels to exceed levels posted one year ago. Conversely, only 9 percent of surveyed businesses predict declining employment levels.
Expectations were particularly strong among manufacturers surveyed. Sixty-three percent of manufacturers expect job gains in 2014’s fourth quarter vs. just 2 percent predicting job level declines for their local operations.
Per employee wage and salary levels have trended modestly upward in recent quarters. Currently, employers see wages and salaries increasing by an average of 2.4 percent over the next 12 months, up marginally from the 2.3 percent increase forecast in 2014’s third quarter and the 2.2 percent gain predicted in the year’s second quarter.
Expectations for calendar year 2014 as a whole have moderated since the beginning of the year. Currently, 71 percent of all businesses surveyed predict improved real sales levels for 2014 as a whole. This forecast is down slightly from the 75 percent who saw 2014 calendar year sales gains at the beginning of 2014. Currently, 15 percent of businesses expect sales declines for the year as a whole, while 14 percent predict no change.
In the survey’s first look at expectations for the 2015 calendar year, 77 percent of metro area businesses see real sales gains in 2015 (vs. 2014) while 4 percent project declines. The remaining 19 percent see no change. Expectations for 2015 rank modestly higher than the initial forecast for 2014 (given 12 months ago) when 68 percent of respondents forecast sales gains for the forthcoming calendar year.
Manufacturers are optimistic toward 2015 real sales increases.
The Business Outlook Survey, conducted by the MMAC, contains responses from 113 Milwaukee-area firms, both large and small, employing more than 46,100 people.