Sales expectations and optimism about profits declined sharply for the third quarter among Milwaukee-area businesses, according to the latest Metropolitan Milwaukee Association of Commerce Business Outlook Survey.
The survey, which included responses from 71 Milwaukee area firms, found 55% expect real sales declines in the third quarter compared to year-ago levels, while 23% forecast increases. That’s compared to the first quarter, when 69% of those surveyed expected year-over-year sales increases, with 14% expecting declines.
Just under a quarter (24%) of businesses expect third-quarter profit increases from year-ago levels, down from 68% who forecast gains in the year’s first quarter. Currently 55% of companies see third-quarter profit decreases from last year, while 21% see no change.
Of those surveyed, 70% indicated they remain completely viable under current economic conditions, and another 15% said they would be viable under current economic conditions for more than 12 months.
“Growth expectations for local businesses dropped sharply from earlier levels as the effects of COVID-19 closures took their full measure,” said Bret Mayborne, the MMAC’s economic research director. “On the positive side, a significant percentage of companies felt that business would be back to normal in either 2020’s third or fourth quarter. But the largest number predicted calendar year 2021 as the likely date when normal activity levels would be reached. And the majority of companies in the survey expect to weather the storm.”
Actions taken related to COVID-19 continue to affect the overall job picture in the region. Of those surveyed, 31% indicated that they had laid off or furloughed workers in the second quarter. Among those who laid off workers, half said they would rehire those employees while 32% did not have plans to rehire, and 18% were unsure.
Businesses expect negative job trends to continue into the third quarter, with 41% projecting third-quarter job decreases, 24% forecasting increases and 35% expecting no change. That’s compared to the first quarter, when 13% of those surveyed expected employment declines while nearly half (47%) saw increases.
Opinions were mixed on the question of when businesses expect activity to get back to normal. Just under half (45%) felt the return to normal was likely in 2021, while 8% said it would likely happen sometime beyond 2021. Forty-three percent feel a return to normal was likely by the year’s end, including 20% who said normal business activity either already has returned to normal or would return to normal in the third quarter, and another 23% said that would happen in the fourth quarter.
