Alabama Economy to Improve Moderately in 2012 originally posted by the Home Builders Association of Alabama on February 7, 2012:
Growing nonfarm employment, a declining unemployment rate, and ongoing development projects across the state have economists at The University of Alabama’s Center for Business and Economic Research (CBER) feeling more optimistic about the state’s economy in 2012. GDP growth is expected to accelerate from an estimated 2.2 percent in 2011 to about 2.5 percent this year. Forecasted employment gains of 1.1 percent compare to last year’s 0.8 percent increase. Around 20,000 nonfarm jobs could be added during 2012.
Alabama nonfarm employment rose by 700 during the last quarter of 2011 and in December was 6,900 above its year-ago level. In particular, the state’s durable goods manufacturers have rebounded, with a net gain of 4,300 jobs during the 12-month period. Manufacturers of primary and fabricated metals and transportation equipment are expected to contribute to job growth this year. Service providing businesses, in particular, administrative, support, and waste management services and retail trade, should see a strong showing on job creation during 2011 carry over into 2012. However, the state’s unemployment rate, back below the U.S. rate at a seasonally-adjusted 8.1 percent in December, will decline only slowly as improvement in the employment picture encourages more Alabamians to enter or reenter the labor force.
The contribution of exports to the Alabama economy continues to grow; at $15.5 billion in 2010 exports accounted for 10.2 percent of the state’s GDP. A total of $13.2 billion in exports during the first nine months of 2011 was up 17.9 percent from the same period during 2010. Shipments of transportation equipment, chemicals, minerals and ores, and primary metals all showed strong growth.
State tax revenues ended FY2011 much improved; tax collections totaled around $8.6 billion, up 5.0 percent from a year earlier. However, gains in tax receipts slowed to 2.5 percent in the first quarter of FY2012 compared to first quarter FY2011. Stronger growth in consumer spending in the state is needed to boost revenues; an increase of 1.8 percent in sales tax collections during the most recent quarter compares to an average of 3.6 percent in FY 2011. CBER expects growth in total tax receipts to slow to around 3.5 percent during FY2012.
Large manufacturing and services employers will be the major economic drivers in 2012. These include firms in automotive manufacturing, shipbuilding, steel, utilities, tourism, healthcare, biotechnology, and the state’s major universities. However, uncertainties about federal budgets and deficit reduction will continue to challenge Alabama’s many private contractors and government facilities engaged in aerospace and defense-related projects.
Business sentiment among executives statewide rebounded into positive territory on the Center’sAlabama Business Confidence Index™ (ABCI) survey for the first quarter of 2012, rising 5.3 points to 50.8. About 76 percent of panelists expect the Alabama economy to hold its own or improve this quarter.
Source: Center for Business and Economic Research
Culverhouse College of Commerce
The University of Alabama