An improving business environment is forecast for the second quarter by southeastern Wisconsin businesses, according to the latest business outlook survey conducted by the Metropolitan Milwaukee Association of Commerce (MMAC).
Sales and profit expectations for the second quarter rose from first-quarter forecasts, while job expectations remained at a high level.
"Recent survey results suggest that metro Milwaukee’s economy is back on a sustainable growth path, be it in the manufacturing or non-manufacturing sectors," said Bret Mayborne, the MMAC’s economic research director. "Milwaukee area businesses expressed a high level of confidence that real sales gains will be posted both for 2005’s second quarter (vs. 2004’s second quarter) and for the calendar year as a whole."
Eighty-two percent of the surveyed businesses see rising real sales levels for the second quarter (vs. 2004’s second quarter), up from the 75 percent who forecast first-quarter gains. The percentage expecting second-quarter sales increases is the highest registered in the 11-1/2 years in which the survey has been conducted in a like manner, Mayborne said.
Currently, only 4 percent of the businesses surveyed see declines in second-quarter sales levels, while 14 percent expect no change.
Expectations are nearly equal by firm size and industry. Among manufacturers, 82 percent see second-quarter sales gains, equaling the 82 percent of non-manufacturers who see such increases.
By employment size, 83 percent of large companies (100 or more employees) surveyed see second-quarter sales gains, only slightly higher than the 80 percent of small companies.
Profit expectations for 2005’s second quarter were similarly optimistic. Seventy percent of all businesses surveyed see increases in second-quarter profit levels (vs. year ago levels), higher than the 59 percent who expected first-quarter profit gains. Only 9 percent see declines in second-quarter profits, while 21 percent expect no change.
The level of optimism expressed toward increasing profit levels is the strongest registered since the second quarter of 1998.
Local businesses also see near-term gains in future job levels. The percentage of businesses forecasting second-quarter 2005 employment increases vs. year-ago levels (50 percent) outnumbers the proportion expecting job declines (10 percent) by a five-to-one margin.
After more than six years of manufacturing job declines, employment in the metro area’s manufacturing sector may finally have turned the corner. Jobs in this sector posted year-over-year gains in each of 2005’s first two months, and manufacturers surveyed are more likely to see second-quarter job increases than declines by a wide margin.
For the second quarter, half of all manufacturers see job increases in their local operations (vs. year-ago levels), while only 13 percent expect employment declines. The remaining 37 percent see no change.
Sales forecasts for the year 2005 matched those expressed at the beginning of the year.
Currently, 84 percent of businesses surveyed expect increases in calendar year 2005 sales levels, while 8 percent foresee sales declines. Eight percent expect no change in future sales levels.
The Business Outlook Survey, conducted by the MMAC, contains responses from 120 Milwaukee area firms, both large and small, employing more than 53,300 people. The survey is first published exclusively in Small Business Times.
April 1, 2005, Small Business Times, Milwaukee, WI
