January 04, 2012
Things are looking…up?
Positive indicators can also be found in the 2012 First Business Economic Survey of Northeast Wisconsin, a broader based survey of all businesses in Northeast Wisconsin:
Some of the drag on the improvement in Northeast Wisconsin can be found in the negative results of the same survey:
I would interpret the results of these surveys and some possible positive outcomes in the following ways:
First, in both surveys, firms reporting revenue increases are up. This is good. Pushing more products out the door is what most businesses are around to do. I am not too concerned about the increase in operating costs (and therefore level profitability) as there was a significant amount of stress in the system as firms held off on increasing operating costs in prior periods, allowing more revenues to fall to the bottom line.
Second, firms feel that prices need to increase and many are pushing this increase out to their customers. Many firms reported increased sales revenues and it could be that part of this increase is coming through increased prices and not just increased volumes.
Third, firms are still hiring, and it appears that they are hiring as an investment in the future, since the profitability of firms remained flat year over year and capacity utilization actually declined. The inability of firms to find and attract qualified candidates is the most disconcerting indicator and is reflected in both surveys.
Anecdotally, I saw more people than ever this year at the NEW North Summit 2011. Many of the discussions that I participated in lead me to the following conclusions:
Regarding the workforce, noted as a challenge in both surveys, the labor pool is strengthening, largely due to some of the initiatives of the area technical colleges and workforce development entities. These groups are critical to improving the pool of talent that is needed to fill the jobs that will come online in the future.
Prices appear to be increasing and that’s very positive. That indicates that there is confidence that customers are at the point of being willing to pay more for the goods and services they use.
Also, as expenses normalize, this will lead to better margins. I think all agree that business has been improving, despite some of the noise and distractions occurring in the region and nation on a political level.
So, call me optimistic, but I believe improvements will continue to be made as long as businesses share this optimism and feel confident that things will continue to improve.
Michael E. (Mickey) Noone is President Northeast Region, First Business Bank, headquartered in Appleton