Continued economic growth and recovery ranked as the top business concern of companies followed by inflation and labor shortages, according to the latest
Metropolitan Milwaukee Association of Commerce business outlook survey.
In the
MMAC’s third quarter survey, supply chain issues were the top business concern, followed by crime, labor shortages, inflation and then growth. The shift in top concerns comes as higher interest rates, meant to combat inflation, add to the cost of doing business for many companies and could potentially pull the economy toward a recession.
“The current situation calls into question whether local growth can continue in the near term and, in fact, metro (Milwaukee) businesses surveyed ranked continuing economic growth as their number one concern.” said Bret Mayborne, economic research director at MMAC. “Yet with that said the metro area has not yet slipped into a jobs recession – job growth, while slow, continues and unemployment rates remain low despite lackluster expectations.”
Despite concerns about growth, the 82 area businesses responding to MMAC’s survey have a slightly better outlook for the current year with 54% expecting to end the year with higher sales. In the third quarter survey, 49% expected a sales increase.
The percentage expecting a decline for the full year also increased from 28% in the third quarter to 37%.
Businesses are also more pessimistic heading into 2024 than they were heading into 2023 at this time last year.
The MMAC survey found 63% of businesses expect sales to increase next year after accounting for inflation. In 2022, the survey found 76% of businesses were forecasting a sales increase. The shift was driven by more businesses expecting no change in sales, 26% this year versus 12% in 2022.
By size, small businesses are much more pessimistic about their outlook for next year with 56% of companies with fewer than 100 employees expecting a sales increase compared to 70% for large firms.
Small firms were more likely to forecast a down sales year with 20% expecting a decrease compared to 3% among large firms surveyed.
The survey found mixed results on wages.
Compared to the third quarter survey, released in July, expectations for wage growth over the next 12 months are up with respondents forecasting a 4.2% increase. In July, respondents expected a 3.6% wage increase.
However, the fourth quarter survey from a year ago called for a 4.8% increase in pay.
Smaller companies and non-manufacturing companies, in particular, had lowered their wage growth expectations year-over-year.
