First Business Economic Survey of Dane County Reveals Downturn Has Hit All Business Sectors
Madison, WI - December 9, 2009 - Dane County businesses felt the economic downturn that began in 2007 almost indiscriminately in 2009. However, despite the disappointing year, business owners have positive expectations for 2010, according to a report released today by First Business Bank at the invitation-only First Business Economic Forum.
The First Business Economic Survey of Dane County, sponsored by First Business Bank and conducted by the A.C. Nielsen Center for Marketing Research at the University of Wisconsin-Madison School of Business, showed that all business sectors reported declines in all seven economic categories surveyed- sales revenue; profitability; total operating costs as a percentage of revenue; capital expenditures; number of employees; overall wage changes; changes in pricing; and operating capacity.
More than 50 percent of businesses did not meet expectations in 2009. Although sales were down overall, the manufacturing sector saw the greatest decline, with 86 percent of firms reporting decreased sales, the worst value by any sector in the history of the survey. Profitability also declined and for the first time more than half of businesses reported decreased profitability. Businesses that reported steep profit declines (more than 10 percent), was double that of last year.
In addition, 40 percent of businesses reported a decrease in the number of employees, the highest level in the survey’s history. Wages were also influenced, with more than 60 percent of businesses indicating no increase or a decrease in wages. Pricing was also affected by the economic downturn. More than 66 percent of businesses indicated no change or a lowering of pricing in 2009. Future pricing predictions also lagged behind previous year projections, with the majority of businesses specifying no price change or plans to lower prices further.
"This was definitely a year of extremes," says Scott Converse of the UW-Madison School of Business. "We not only saw declines in all economic indicators, but we saw more decreases that are classified as steep than any other year of the survey. It’s further evidence that while Dane County’s economy is unique, it’s not immune to the effects of the recession."
Despite the unsatisfactory year, businesses are optimistic about 2010. The report indicated 74 percent of businesses expect to do better in 2010. Employment is also looking better with more than 83 percent expecting either no change or an increase in employee numbers next year.
Mark Meloy, President and CEO of First Business Bank, said the report shows that Dane County is not isolated from the national economic downturn. "Despite some economic insulation built-in by advantages such as state government, technology, and the University of Wisconsin, Dane County is still susceptible to national economic events," Meloy said.
More than half of businesses expect sales revenue and profitability to increase in 2010 and a majority of firms anticipate wages to increase next year.
"There is a real upside to this report," says Converse. "Firms have been able to contain costs and as a result are poised real well for a recovery. The survey shows this with 2010 performance expectations back at the levels we saw prior to the recession."
Each year the survey asks a current event question. In 2009, businesses were asked about the impact Federal healthcare reform would have on their business. When asked, "How would the proposed healthcare legislation affect your business?" nearly 80 percent responded negatively. It should be noted that health care legislation was not finalized at the time of the survey (October, 2009), so responses were not based on a specific healthcare plan.
First Business Bank has been conducting the economic survey of Dane County for the past seven years. The survey was based on the responses of 425 businesses across the county. The sample size has an error range of .05 and a confidence level of 95 percent. Full survey results are available under "Newsroom" at www.firstbusiness.com
About First Business Bank
First Business Bank was established by area business owners and investors in 1990 to specialize in quality business banking for the local business community. First Business Bank offers a full line of financial services for businesses and business owners including: commercial lending, treasury management, private banking, retirement plans, investment management services, trust services, asset-based lending, and equipment finance and leasing. For additional information, visit About First Business Financial Services, Inc.
First Business Financial Services (Nasdaq:FBIZ) is a $1.3 billion Wisconsin-based bank holding company that specializes in focused financial solutions for businesses, key executives, and high net worth individuals through its operating companies. It is the 2nd largest Wisconsin-based commercial bank holding company listed on NASDAQ or the NYSE. Its companies include: First Business Bank - Madison; First Business Bank - Milwaukee; First Business Bank - Northeast; First Business Trust & Investments; First Business Equipment Finance, LLC; and First Business Capital Corp. For additional information, visit www.firstbusiness.com or call (608) 238-8008.
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