Whether it is compared to the previous quarter or a year ago, a majority of area businesses surveyed by the
Metropolitan Milwaukee Association of Commerce expect to see a sales increase in the third quarter, even after taking inflation into account.
Specifically, the survey found 59% of firms expect sales to rise from the second to the third quarter while 56% are anticipating a year-over-year sales increase in the current quarter.
A majority, 51%, are also anticipating their quarterly profits will be up year-over-year.
While it is relatively good news that a majority of respondents remain optimistic about both their top and bottom-line prospects, the survey results and comparisons to MMAC’s other outlook surveys this year point to a level of uncertainty about the direction of the economy.
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Bret Mayborne[/caption]
Bret Mayborne, director of economic research at MMAC, said price inflation and higher interest rates meant to combat inflation have restrained potential future economic growth.
“This has led locally to an economic trend that has been riding the fence, between continued growth on the one hand versus stagnation on the other” Mayborne said. “The third-quarter business outlook results reflect this tension.”
For example, expectations for 2023 results have slipped from the start of the year when 70% of businesses expected to see a sales increase for the year to now 49% expecting an increase after accounting for inflation.
Full year profit expectations have slipped too from 63% expecting an increase at the start of the year to 53% now.
Manufacturing firms, however, saw an increase in the number expecting rising profits from 61% at the start of the year to 74% now.
Non-manufacturing firms in the survey saw a drop from 64% expecting better profits to 40%.
The employment outlook has also weakened with 37% of businesses expecting to increase their total employment this year, down from 53% at the start of the year. A plurality, 47%, expect no change in their number of employees.
Capital investment is one potential bright spot with 46% of respondents expecting an increase for the year, up from 37% at the start of the year.
Large companies in particular are more bullish on their capital spending plans with 51% planning an increase for the year, up from 39% at the start of the year.
Among small firms, defined as those with less than 100 employees, 39% plan to increase capital expenditures, up from 35% at the start of the year.
