Business leaders’ outlook still positive, still declining

The fourth quarter 2012 Charlotte Business Confidence Index report, released Sept. 28, shows Mecklenburg County business leaders’ optimism about economic prospects declined compared to their expectations for the third quarter. The overall index value of 52.3, a decrease of 3.1 points compared to the third quarter, remains positive on business confidence, with the index above 50 for a fourth consecutive quarter. But – for the first time since the last half of 2011 – this is the second consecutive quarter of decline.

Index values higher than 50 indicate positive expectations; values less than 50 indicate negative expectations. The index provides an early indicator of future economic activity in Mecklenburg County by surveying business leaders about national and local economic expectations as well as their company’s expectations regarding sales, profits, hiring and capital spending. The survey, asking about expectations for the fourth quarter 2012, took place the first two weeks of September.

The index is a collaborative effort between Charlotte Works and the City of Charlotte, with research and analysis by the UNC Charlotte Urban Institute. Modeled after successful confidence index initiatives in Colorado and Alabama, the Charlotte Business Confidence Index helps city leaders plan for economic development initiatives and provide forward-looking data concerning possible business expansion or contraction.

The results of the fourth quarter survey show that business leaders again have a slightly negative outlook on the national economy for the second consecutive quarter. The survey recorded positive expectations for four of the six component questions that contribute to the overall index. As the table shows, all the fourth quarter index values posted a decrease. The capital expenditures index recorded a value of 48.6, representing the largest decrease among all index values, decreasing 6.0 points from the third quarter.

With an index value of 54.5, business leaders continue to be confident about the local economy more so than the national economy. Business leaders have the highest expectations for sales, with a sales index value of 56.8. Profits and hiring expectations both reported positive index values of 54.1 and 52.3, respectively. Capital expenditures recorded a negative index value for the first time since the fourth quarter 2011.

Participation in the index is open to all businesses in Mecklenburg County, who must first register to receive quarterly invitations to complete the survey. For classification and verification purposes, the registration asks for company information concerning business type, revenue and employment size. The next survey for the first quarter 2013 will take place the first two weeks of December.

To see a copy of the full report from the fourth quarter, click the link below. For more information about the Charlotte Business Confidence Index, its methodology and how business leaders can register to participate, go to /businessconfidence. To read the full report for this quarter, click here.