First Business Economic Survey Reveals all Sectors of the State Show Similar Trends
(MADISON, WI) - January 13, 2011 - Wisconsin businesses appear cautiously optimistic for 2011 with at least 49 percent of businesses in all three geographic regions predicting increased revenue, profitability, and wages for 2011. Despite predictions for increased profits, none of the regions had more than 39 percent of businesses predict increased capital expenditures. No region had more than 29 percent of business predict that they would be increasing the number of employees for 2011. Additionally, 47 percent of companies forecast increasing operating costs for 2011. Both Dane County and the Milwaukee/Waukesha region show 46 percent of firms reporting decreased actual revenue.Interestingly, the Northeast Region and the Milwaukee/Waukesha Region show nearly identical results for the capital expenditure category in 2010, an increase of 30.6 percent. Dane County followed closely at 30.1 percent.The Northeast Region contained the smallest percentage of firms reporting decreased wages (14.3 percent) and the highest percentage of firms reporting increased wages (43.2 percent).Across all areas, over 75 percent of firms are projecting either no change to wages or very slight increases (1-3 percent).Businesses in Dane County, Milwaukee/Waukesha Counties, and Northeast Wisconsin faced almost identical reasons for low performance in 2010. Domestic sales shortfall was the most reported reason for not meeting expectations in all regions. Additional reasons cited were slow down in the housing market and higher operating costs.Businesses in all three regions showed positive expectations for business performance in 2011. Businesses in Northeast Wisconsin showed the highest percentage of firms expecting better performance next year, at 80.53 percent.
Interestingly, the Northeast region of the state appears to be rebounding more quickly than Dane, Milwaukee and Waukesha Counties. The Northeast region had the highest percentage of firms reporting an increase in: actual sales revenue, actual profitability, and actual changes in wages. Northeast also had the highest percentage of firms reporting exceeding expectations for performance in 2010.
"In Northeast Wisconsin, results were led by significant increases in sales and profitability in the manufacturing sectors. This can be largely attributed to several large companies in the region drawing a fairly significant amount of the capacity of manufacturing firms. The continued success of several of those larger companies, coupled with a projected increase in capital expenditures for 2011, suggests companies believe 2011 could be even stronger," stated Mickey Noone, President of First Business Bank - Northeast.
The Northeast region appears the most optimistic regarding sales revenue in 2011, as 63 percent of firms forecast increasing revenue compared to only 58 percent and 56 percent for Dane County and the Milwaukee/Waukesha region respectively.
"Milwaukee and Waukesha County businesses have learned and implemented management strategies in the poor economy that are paying off," says Dave Vetta, President and CEO of First Business Bank - Milwaukee. "While we are not out of the woods, businesses are moving in the right direction."
The First Business Economic Survey for Dane County, Milwaukee/Waukesha Counties, and the Northeast region of the state was 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. Results for each region were released late last year. The report released today looks at the state as a whole to compare economic realities across regions.
Additional survey findings include:
"Dane County showed the highest percentage of businesses that increased prices in 2010 and highest percentage of firms projecting increased prices for 2011," noted Mark Meloy, President & CEO of First Business Bank - Madison. "This may be an indication business owners believe they have no more meaningful expense reduction alternatives or their customers are simply ready to accept higher prices. It will vary by industry but higher costs seem to be on the horizon for many sectors."
The First Business Economic Survey is an annual project sponsored by First Business Bank. The survey is administered by the A.C. Nielsen Center for Marketing Research at the University of Wisconsin, and mailed to business owners, CEOs, and CFOs at companies with five or more employees in three major business regions in Wisconsin: Dane County, Milwaukee and Waukesha Counties combined, and the 18 counties that make up Northeast Wisconsin. The survey asks respondents to evaluate the current, and predict the future performance of their businesses on eight key economic indicators: sales revenue, operating costs, capital expenditures, profitability, staffing, wages, pricing, and operating capacity. The local results are presented at Economic Forums each December.
"There is reason for optimism," says Corey Chambas, President & CEO of First Business Financial Services, the Wisconsin-based holding company for First Business Bank. "2010 was a challenging year; however there are signs that Wisconsin businesses are weathering the storm. I witness this when I speak to local business owners in Madison, Milwaukee, and the Fox Valley, and I see it in the results of this report. The resilience and confidence of Wisconsin business owners is inspiring, and because our businesses are really interlinked - we’re each other’s suppliers, customers, etc. - you can’t help but feel proud of our state’s businesses and feel optimistic."
First Business Bank has been conducting the economic survey of Dane County for the past eight years. The survey was based on the responses of 449 Dane County businesses across the county. First Business Bank has been conducting the economic survey of Northeast Wisconsin for three years. The survey was based on the responses of 449 Northeast Wisconsin businesses across the Northeast region. This is the third year First Business has been conducted the economic survey of Milwaukee and Waukesha Counties. The survey was based on the responses of 628 Milwaukee and Waukesha County businesses across the two counties. The sample size has an error range of 5 percent and a confidence level of 95 percent. Full survey results are available under "Newsroom" at www.firstbusiness.comAbout 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 www.firstbusiness.com or call 608-238-8008 in Madison, 262-792-1400 in Milwaukee, or 920-734-1800 in Northeast Wisconsin.
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. 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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First Business Financial Services, Inc.