Over the past six months, I’ve had versions of the following conversation play out hundreds of times.
In the aftermath of the Great Recession, I ask a southeastern Wisconsin business owner, “How’s business?”
Almost always, the reply is along the lines of: “It’s OK. Things are moving in the right direction. They just aren’t going there as quickly as we’d like them to be.”
Indeed, by any measure, the economy is moving forward. The nation has had 28 consecutive months of private sector job growth. But the pace of that growth has been barely enough to keep up with the growth of the workforce. Hence, the nation has been unable to put much of a dent in the unemployment rate.
And until that unemployment rate declines, the housing market is not likely to rebound. And until the housing market rebounds, consumer confidence – and spending – are not likely to grow.
So, here we are at the mid-year pole. The economy seems to be stuck in second gear. Yes, we’re moving forward, but we’re having trouble building any speed.
A deeper dive into the numbers, however, reveals plenty of reasons for hope that the speed of the recovery could ramp up in the second half of the year.
As noted in the story on page 4 of this magazine, the majority of respondents to the Mid-year BizTimes Business Dashboard Survey are expecting their companies to grow in revenues, profits and hiring in 2012. They also plan to invest in new equipment.
Those results are echoed by the Metropolitan Milwaukee Association of Commerce’s third quarter Business Outlook Survey, in which 69 percent of the businesses expect higher sales and 64 percent forecast higher profits.
Even more encouraging, the number of employers in the MMAC survey forecasting increased hiring outnumbers the employers who plan to decrease staff by more than a four-to-one margin.
The Wisconsin economy is expanding at a moderate pace, as manufacturing continues to grind out a modest recovery, while exports are rising at a brisk pace for another solid year, according to the State Monitor report released by BMO Capital Markets Economics.
The Wisconsin business sector remains firmly in expansion territory. Exports continue to rise, up 12.5 percent year-over-year in the first quarter.
Machinery shipments lead the gains up a strong 28 percent year-over-year to the highest level on record.
Meanwhile, 97 percent of the employers responding to the latest QPS Employment Group survey expect their business to improve or at least stay the same in the third quarter, while only three percent expect declines.
Brookfield-based QPS surveyed more than 315 companies, including manufacturers, banks, printers, distributors and information technology firms throughout the Midwest as part of its employment forecasting survey.
Perhaps the most promising data comes from the latest Manpower Employment Outlook Survey, which rated metropolitan Milwaukee as the top-ranked metro market in the nation for hiring prospects over the next three months.
According to the survey, 31 percent of employers in the Milwaukee, Waukesha and West Allis metropolitan statistical area (MSA) plan to hire more employees from July to September, while just 2 percent expect to reduce staff, producing a net employment outlook of 29 percent – the best in the nation.
Another 62 percent expect to maintain their current workforce levels and 5 percent are not certain of their hiring plans.
“The employment forecast for the third quarter is considerably healthier compared to the second quarter of 2012 when the Net Employment Outlook was 16 percent,” said ManpowerGroup spokeswoman Nicole Langley. “Employers expect improved employment prospects compared with one year ago when the Net Employment Outlook was 21 percent.”
For the coming quarter, job prospects appear best in Construction, Durable Goods Manufacturing, Non-Durable Goods Manufacturing, Transportation & Utilities, Wholesale & Retail Trade, Information, Financial Activities, Professional & Business Services, Education & Health Services, Leisure & Hospitality and Government.
Of the more than 18,000 employers surveyed in the United States, 21 percent expect to add to their workforces, and 6 percent expect a decline in their payrolls during Quarter 3 2012. Seventy-one percent of employers anticipate making no change to staff levels, and the remaining 2 percent of employers are undecided about their hiring plans.
“In our on-demand world, seeing long-term changes can be difficult, but it is important to keep in mind that employer confidence has been on an upward trajectory for three years,” said Jonas Prising, ManpowerGroup president of the Americas.
If the pace of hiring indeed picks up, the economy will finally shift out of second gear.
