Business group reports lowered expectations during pandemic
Milwaukee-area businesses have much lower expectations for sales, profits and job growth than they did at the start of the year, a survey released
Tuesday shows.
The results of the Business Outlook Survey from the Metropolitan Milwaukee Association of Commerce come as COVID-19 cases spike in Wisconsin, with the state reporting more than 1,000 new cases Tuesday.
“The lingering effects of COVID-19 have dampened Metro Milwaukee companies’ expectations of third-quarter business activity,” the MMAC said in a statement announcing the results.
“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.
Asked when they expect business conditions to improve, some businesses said the third or fourth quarter of 2020, Mayborne said. “But the largest number predicted calendar year 2021 as the likely date when normal activity levels would be reached.”
On a positive note, a majority of the businesses in the survey said they expect to remain in business and “weather the storm,” Mayborne said.
Of the businesses surveyed, 70 percent said they remain completely viable under current economic conditions, according to the MMAC.
Sales flat or down
Sales expectations declined sharply for 2020’s third quarter, the MMAC said. More than half — 55 percent — expect sales declines and another 23 percent expect sales to be unchanged vs. the same period a year ago, while 23 percent expect an increase.
In the first quarter of 2020, 69 percent of those surveyed were forecasting year-over-year sales increases while only 14% were expecting declines.
Profit forecasts take cut
The survey also showed a sharp decline in optimism about profits. Among surveyed companies, 24 percent expect to turn a higher profit than they did at the same time last year. That number was 68 percent in the first quarter.
Currently 55 percent of the companies surveyed are forecasting thirdquarter profit decreases while 21 percent expect no change.
Hiring plans flatten
“Actions taken as a result of COVID-19 strongly affected the overall job picture in the metro area,” the MMAC said. “Employment fell by 111,200 in the March to April period due to COVID-19 shutdowns, a record decline.”
Since then, the local economy has recovered 43,300 of those jobs, “but remains significantly below pre-COVID-19 levels with unemployment rates at double-digit levels.”
The flat to declining job trend is likely to continue during the third quarter, according to the survey.
The MMAC said 41 percent of businesses surveyed projected third-quarter job decreases but some — 24 percent — are still planning to hire. More than a third — 35 percent — are forecasting no change.
The survey results “mark a large shift from earlier expectations,” according to the MMAC. “In the first quarter of 2020, only 13 percent of those surveyed expected employment declines while nearly half — 47 percent — were expecting to add jobs.
Smaller employers — those with fewer than 100 workers — were more likely to hire in the third quarter than those companies in the survey with 100 or more employees.
According to the survey, only 4 percent of large employers expect to add jobs during the third quarter while 33 percent of smaller employers said they expect to be adding jobs during the quarter.
Contact Joe Taschler at (414) 2242554 or jtaschler@gannett.com. Follow him on Twitter at @JoeTaschler or Facebook at facebook.com/joe.taschler.1.