Metro Milwaukee businesses are less optimistic for sales growth this year than they were at this time a year ago and continuing economic growth and recovery is the top business concern to start the year, according to the latest Metropolitan Milwaukee Association of Commerce outlook survey.
The survey of 70 Milwaukee area companies found 61% expect an increase in sales for the full year, down from 70% at this time in 2023. Just 7% are forecasting a decrease in sales for the year, down from 14% a year ago. Nearly one-third, 31%, of businesses expect no change in sales.
A plurality, 47%, expect no year-over-year change in their total employment for 2024 while 44% expect to increase total employment.
The first quarter outlook is less bullish than the full year picture with 49% of firms expecting year-over-year sales growth in the quarter. Again, 61% expect to see full year sales growth.
A year ago, 59% of firms expected a first quarter sales increase.
“In percentage terms, expectations are tepid for 2024’s first quarter but optimism polled higher for the year as a whole,” said Bret Mayborne, vice president – economic research at MMAC. “That optimism provides hope for better growth dynamics as the year moves forward.”
Profit expectations are similar to a year ago with 61% expecting an increase, down slightly from 63% at the start of 2023. In last year’s first quarter survey 15% expected profits to decrease for the year, that figure is lower this year at 10% with 29% expecting no change in profits.
The outlook for capital expenditures is up from a year ago with 43% expecting an increase, up from 37% a year ago.
While a majority of respondents expect inflation to be 3% to 5%, expectations are also trending down. In this year’s survey, 69% expect inflation to be in the 3% to 5% range, up from 53%. A year ago, more than a quarter expected inflation to be 6% to 9%. Now just 9% expect it to be in that range and 21% expect it to be 0% to 2%. A year ago, just 11% had that view.
The outlook on wages reflects a downward inflation trend with the average increase expected among respondents coming in at 3.6%, down from 4.1% a year ago.
As for top business concerns, the continuation of economic growth and recovery remained the top priority for respondents as it was in the fourth quarter, especially amongst large companies and manufacturers. At the start of 2023, price inflation was the top concern.
Price inflation now ranks third behind labor shortages. Supply chain issues moved up one spot to fourth, ahead of health care costs. Crime remained the sixth top concern.
