New MMAC poll is strongest since 9/11

Milwaukee-area businesses are more optimistic about their fourth quarter performances than they have been in any quarter in more than four years, according to the Metropolitan Milwaukee Association of Commerce (MMAC) Business Outlook Survey.
The survey respondents’ sales and employment expectations rose from third quarter forecasts, while profit expectations held steady.
"Sales and employment expectations for the year’s fourth quarter are as high as they have been since before the 2001 recession," said Bret Mayborne, the MMAC’s economic research director. "Survey results suggest that accelerating growth is likely in the metro area for the remainder of this year and into 2005."
Seventy-five percent of surveyed businesses foresee rising real sales levels for the fourth quarter (compared with the fourth quarter of 2003), up from the 70 percent who forecast third-quarter gains.
The percentage of businesses predicting quarterly sales increases reached its highest level since the second quarter of 2000.
Only 9 percent of the respondents foresee declines in fourth-quarter sales levels, while 16% expect no change.
The bullish projections in the new MMAC survey surprised Karen Vernal, president of downtown Milwaukee-based Vernal Management Consultants LLC, who is not convinced the local economy is so robust.
"It really depends on the client’s organization and industry. I just met with a client who projects that it will be at least 18 months before they believe they will be even close to the level of profitability they were at before 9/11," said Vernal, who is a member of the MMAC’s Council of Small Business Executives (COSBE) board of directors.
"There are some that are cautiously optimistic and beginning to take a look at adding staff. But I really think it is very industry-specific. It’s spotty, it really is," Vernal said.
Vernal candidly suggested that she is wondering if some of the responses to the MMAC survey were politically motivated, as in attempting to validate President George W. Bush’s claims that the economy is in full recovery.
"Frankly, I’m wondering if any of the responses are politically influenced. I’m just asking the question. That’s the message the (Bush) campaign puts out, and I’m fascinated with those kinds of (poll) results at this time of year. Especially this year," Vernal said.
Mayborne didn’t’ entirely dismiss the notion that some respondents to the survey might have political motivations, but he said the overall results could not be heavily skewed by such shenanigans.
"I’ve been here almost 20 years, through a couple of different administrations, I guess," Mayborne said. "I’ve never noticed anything per se, but I haven’t looked for it. I doubt that it’s that direct. It might be kind of an underlying thing that they think the (economic) record needs to be corrected, but the numbers have been sneaking up since late last year.
"There may be a little bit of added optimism in there because of the political element, but no. I just think we’re on a ramp-up," Mayborne said.
Regardless of their motivations, manufacturers expressed particular optimism for the upcoming quarter in the survey. Eighty-five percent of the responding manufacturers project see fourth-quarter sales gains.
By employment size, 78 percent of large companies (100 or more employees) surveyed foresee fourth-quarter sales gains, compared with 71 percent of small companies.
Profit expectations for 2004’s fourth quarter were virtually unchanged. Sixty-two percent of all businesses surveyed project increases in fourth-quarter profit levels compared with year-ago levels, only marginally lower than the 63 percent who expected third-quarter profit gains. Twenty-one percent expect declines in fourth-quarter profits, while 17 percent expect no change.
The percentage of businesses forecasting fourth-quarter 2004 employment increases vs. year-ago levels (52 percent) outnumbers the proportion those expecting job declines (16 percent) by more than a three-to-one margin. That response was a significant improvement over the 37 percent who had predicted third-quarter job gains.
Employment in the metro area’s manufacturing sector may also be back on track after more than five years of job decline, according to the survey. Manufacturers expressed more confidence toward fourth-quarter employment increases (59 percent) than non-manufacturers (48 percent).
Currently, non-manufacturers and smaller employers anticipate higher average employee wage and salary increases than manufacturers and larger employers.
Optimism toward future sales gains continues into 2005 among the survey respondents. Eighty-two percent of businesses expect increases in real sales levels for 2005, while only 6 percent expect declines. Twelve percent foresee no change.
The Business Outlook Survey, conducted by the MMAC, contains responses from 119
Milwaukee area firms, both large and small, employing more than 55,800 people. The quarterly survey is reported first exclusively by Small Business Times.
October 1, 2004, Small Business Times, Milwaukee, WI