Highlights of Milwaukee & Waukesha Counties Economic Results Released
(WAUKESHA, WI) - December 15, 2010 - Key findings of the 2010 First Business Economic Survey of Milwaukee and Waukesha Counties, which was conducted by the University of Wisconsin’s A.C. Nielsen Center for Marketing Research in September and October of 2010, indicate businesses saw moderate improvements in 2010. Milwaukee and Waukesha businesses are optimistic. A majority of businesses saw their revenue and profitability either remain the same or increase in 2010.Overall, Milwaukee and Waukesha County businesses continue to report results that are worse than 2008 levels. Over 48% of businesses did not meet self-imposed expectations in 2010. However this is an improvement from the 60% of businesses that failed to meet expectations in 2009.
Key Findings for 2010:
Both profitability and sales revenue declined for 46% percent of businesses surveyed. On top of these difficulties, nearly 59% of responding businesses indicated an increase in operating costs as a percent of revenue.
Despite these negative indicators, there is still reason to be optimistic. A majority of businesses indicated that their revenue and profitability either remained unchanged or increased in 2010. This is a dramatic turnaround from 2009 when 72% of business indicated decreased revenue and 68% indicated decreased profitability.Job growth moved in a positive direction as approximately 71% of those surveyed indicated maintaining or increasing employees in 2010. This offers some hope when compared to the nearly 49% of companies that decreased their number of employees in 2009.Job growth is likely to continue to be slow, however, as nearly 60% of firms project adding no employees and 11.5% project cutting employees in the upcoming year.
Wages rebounded slightly in 2010 as well. Approximately 37% of businesses increased wages in 2010, compared to 28% in 2009, and 50% of businesses expect to increase wages for 2011.
Businesses are dealing with increased expenses and operating costs. As noted above the majority of businesses saw an increase in operating costs and 30% of businesses noted an increase in capital expenditures up from 19% in 2009. However, it should be noted that a relatively small amount of this increased cost was passed on to the customer. Of all the businesses surveyed, 67% indicated no change to their pricing or an increase of 3% or less. In the future, customers are likely to see an increased portion of this burden as 45% of businesses project price increases for 2011.Capacity Utilization shifted towards higher utilization rates compared to 2009, although it did not reach the levels seen in 2008. Despite the poor economy, 72% of businesses expect to perform better in 2011, up from 65% a year ago, and the attitude in open-end responses was generally optimistic for the future. While all businesses are reporting a turnaround with increases in both revenue and profitability, businesses self-selecting into the manufacturing sector showed much larger differences than other sectors. Across almost all economic indicators, manufacturing businesses posted significant changes from the prior year. The percentage of manufacturing firms reporting increased sales revenue jumped from 13% in 2009 to 60% in 2010. Over 52% of manufacturing firms indicated increased profitability up from 18% in 2009. The manufacturing sector also posted significant improvements in the wage and number or employee categories. However, even with this remarkable rebound the sector was not immune to the increase in operating costs and capital expenditures seen in other sectors. Some of these increased costs will certainly be passed on to the customer as 40% of manufacturing firms projected increased prices in 2011.
This was the third year for the study. The survey was sent to 8,693 businesses in Milwaukee and Waukesha Counties that were reported to have five or more employees and was addressed to the CEO, CFO, President, and/or business owner. The survey asked respondents to evaluate the current, and predict the future performance of their businesses on eight key economic indicators in each of the following areas: Sales Revenue, Profitability, Total Operating Costs as a % of Revenue, Capital Expenditures, Number of Employees, Overall Wage Change, Change in Pricing, and Operating Capacity.
About First Business Financial Services, Inc.
First Business Financial Services, Inc. (Nasdaq:FBIZ) is a Wisconsin-based bank holding company, focused on the unique needs of businesses, business executives, and high net worth individuals. First Business offers commercial banking, specialty finance, and private wealth management solutions, and because of its niche focus, is able to provide its clients with unmatched expertise, accessibility, and responsiveness. For additional information, visit www.firstbusiness.com or call (608) 238-8008.
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