Economic outlook grimmer

Thursday, September 29, 2011
Business confidence index released for the 4th quarter

Local business leaders’ expectations for the upcoming quarter have dipped into negative territory for the first time since March, when a new opinion survey began.  Not only is their outlook negative for the national economy – as it was after the second quarter – but they’re feeling grimmer about the local economy as well.

The fourth quarter Charlotte Business Confidence Index report, released Sept. 30, shows Mecklenburg County business leaders' optimism about economic prospects in the fourth quarter diminished. The overall index value of 46.3, a decline of 8.7 points compared to the third quarter, signals a negative outlook on business confidence, with the index below 50 for the first time in the three quarters that the survey has been conducted. 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 2011, took place the first two weeks of September.

The index is a collaborative effort between the Charlotte-Mecklenburg Workforce Development Board 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 have a continued negative outlook on the national economy, and now have a negative outlook on local economic expectations.  The survey recorded positive expectations for only two of the six component questions that contribute to the overall index. As the table shows, all the fourth-quarter index values posted a decline.  The local economic outlook index recorded a value of 40.8, representing the largest decline among all index values, dropping 12.9 points from the third quarter.

With a national economic outlook index value of 36.3, business leaders are the least confident with the national economy.  Business leaders have the highest expectations for sales, with a sales index value of 55.4.  While not as high as the sales index value, their outlook on profits is also positive, with an index value of 52.5.  Hiring and capital expenditures reported a negative outlook, with index values of 48.3 and 44.6, respectively.

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.

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 ui.charlotte.edu/businessconfidence.  The next quarterly survey asking about expectations for first quarter 2012 will take place the first two weeks of December, with the report to be released at the end of December.

To read the 2011 fourth quarter report: Download PDF

Jonathan Kozar

Photograph by Nancy Pierce