Southeastern Wisconsin businesses are expressing tempered optimism toward future business activity, according to a new quarterly business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC).
Nearly three-fourths of all companies surveyed by the MMAC foresee fourth-quarter sales to increase from the sales levels of the same quarter a year ago, and more than half expect quarterly employment gains.
However, the level of optimism among local companies dipped slightly from the expectations of the third quarter, according to the survey.
“Results of the fourth-quarter survey were somewhat mixed,” said Bret Mayborne, economic research director of the MMAC. “While the overall level of optimism remains at a healthy level, fourth-quarter expectations on sales, profits and employment did shift downward from those expressed in 2006’s third quarter.”
Seventy-four percent of surveyed businesses foresee rising real sales levels for the fourth quarter (vs. 2005’s fourth quarter), down modestly from the 76 percent who forecast third-quarter gains.
This marks the second consecutive quarter in which the percentage forecasting real sales increases for the coming quarter has fallen. Currently, 9 percent see declines in fourth-quarter sales levels, while 16 percent expect no change.
Manufacturers are somewhat more optimistic toward 2006’s fourth quarter than non-manufacturers.
In addition, 76 percent of small companies (less than 100 employees) surveyed see fourth-quarter sales gains, compared with 72 percent among large companies.
Profit expectations dipped from levels expressed three months earlier. Sixty percent of all businesses surveyed see increases in fourth-quarter profit levels (vs. year ago levels), lower than the 67 percent who expected third-quarter profit gains. Twelve percent see declines in fourth-quarter profits, while 28 percent expect no change.
The job situation in the metro Milwaukee area has shown improvement over the course of 2006, reflecting a tightening labor market. After falling in each of 2006’s first four months (on a year-over-year basis), non-farm job levels reversed course and now have grown in each of the past four months (through August). Survey results suggest continuing job gains into the year’s final quarter.
A majority of both manufacturers and non-manufacturers see rising fourth-quarter employment levels for their local operations (vs. 2005’s fourth quarter).
Expectations on future wage and salary increases were only slightly higher than those expressed three months ago. Among all companies surveyed, a 3.2 percent increase in per employee wages and salaries is forecast over the next 12 months vs. the 3.1 percent annual rise projected three months ago.
With three-quarters of the year complete, 75 percent of all businesses surveyed forecast higher real sales levels for calendar year 2006 than those posted for 2005 as a whole. That was down marginally from the 78 percent who saw such gains at the beginning of 2006.
Seventy-eight percent of businesses see increases in real sales levels for 2007, while only 3 percent expect declines.
The Business Outlook Survey, conducted quarterly by the MMAC and first published in Small Business Times, contains responses from 116 Milwaukee area firms, both large and small, employing more than 46,800 people.
