Area businesses gaining confidence in economy
by Patrick McCreless
Jul 25, 2013 | 2002 views |  0 comments | 44 44 recommendations | email to a friend | print
Some local businesses project better earnings in the third quarter compared to previous months, mirroring a recent study showing Alabama industries' growing confidence in the economy and indicating overall economic improvement.

According to the Alabama business confidence index released Friday by the Alabama Center for Business and Economic Research, state industries are more optimistic about the third quarter of the year compared to the same period last year — reporting improving sales, capital investment and steady hiring. The index gauges business sentiment based on a survey of state company executives.

The latest index is the first optimistic reading since the third quarter of last year, the study shows, with the most confidence gains coming in the automobile, real estate, finance, wholesale trade and construction industries. The study also falls in line with the projections of some area businesses.

The study shows the index increased 5.3 points to 52.9 points, higher than the 50.2 point index for the third quarter last year. An index above 50 points indicates a positive outlook while an index below 50 points indicates a negative outlook.

Ahmad Ijaz, director of economic forecasting for the Center for Business and Economic Research, said several factors are contributing to businesses' growing confidence.

"Employment is growing at a much faster pace and consumer spending has continued growing at a faster pace," Ijaz said. "Business confidence is driven by consumer confidence and that's driven by job growth."

Alabama Department of Labor figures show the state's unemployment rate was 6.5 percent in June, down from the previous month's rate of 6.8 percent and far below the 7.6 percent rate of June last year.

Greg Brown, chairman and CEO of BR Williams Trucking in Oxford, said he is more optimistic about business in the coming months.

"I think things are going to be up," Brown said. "We have an increased demand from our customer base ... it's not a dramatic increase, but it's still better than it was."

Brown said his company's customers range from those in the auto industry to foundries and other manufacturers. Brown said consumers are driving economic improvement.

"I think consumers are tired of waiting to spend," he said.

Richard Simonton, president and CEO of the Oxford-based AOD Federal Credit Union, said loan demand has increased for homes and used cars.

"In the second quarter we saw a turnaround in loan demand, and we're projecting growth will continue in the third and fourth quarters of this year," Simonton said.

Simonton said rising interest rates are driving consumers to start obtaining mortgage loans before costs get too high.

Kevin Riggan, general sales manager for Sunny King Honda in Oxford, has experienced increased sales this year and expects the trend to continue.

"We're definitely projecting improvement in the third quarter, the way things have been going this year, definitely," Riggan said.

Riggan said he projects a 5 percent or 10 percent increase in sales in the third quarter, due in part to new vehicle models, more affordable loan options and the improving economy in general.

Alabama's entire auto industry has seen sales boosts this year, including Honda, which has a manufacturing plant in nearby Lincoln.

Everett King of ERA King Real Estate in Anniston said the housing market, which struggled considerably after the Great Recession hit in 2008, has improved considerably in the area in recent months.

"Our business has been terrific ... we're seeing urgency in the market," King said.

According to the Alabama Center for Real Estate, 104 homes were sold in Calhoun County in June at an average selling price of $122,829. It was the highest number of homes sold in the area in June since 2007, when 139 houses were sold.

Like Simonton, King said the threat of rising interest rates is driving more people to start buying homes again.

Phil Webb, owner of Webb Concrete and Building Materials, said while so far this year hasn't been particularly great for his business, he expects the third quarter to be better.

"We certainly hope and expect business to be a little bit better in the third and fourth quarters than what we've been having the last four or five years," Webb said. "It's been several years since I've been encouraged, but I am now."

Webb said signs of improvement in the residential construction industry have triggered his optimism.

"We do have a ways to go ... but I do feel better and a little more excited," he said. "I don't know if it's going to happen, but I hope so because people have gone through so much in the last six years."

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.
Comments must be made through Facebook
No personal attacks
No name-calling
No offensive language
Comments must stay on topic
No infringement of copyrighted material

Friends to Follow

Today's Events

event calendar

post a new event

Wednesday, April 23, 2014