MILWAUKEE — Economic recovery is expected to continue into 2022, with metro area businesses expressing optimism about future growth in a new Business Outlook Survey of area companies conducted by the Metropolitan Milwaukee Association of Commerce (MMAC.) Eighty percent of businesses surveyed anticipate real sales increases in 2022, while 69% predict profit gains and 66% expect employment growth for their local operations.
“To date the local economy has recovered nearly 70% of jobs lost in the COVID-19 downturn,” said Bret Mayborne, MMAC’s economic research vice president. “Businesses remain optimistic that this recovery will continue through 2022. Nonetheless, there are concerns. Business surveyed see price inflation and labor shortages as potentially troublesome as the new year progresses.”
The Business Outlook Survey, conducted by the MMAC, contains responses from 97 Milwaukee area firms, both large and small, employing more than 21,000 people.
Calendar year sales optimism among Milwaukee area businesses remains strong. Eighty percent of those surveyed expect increases in real sales levels in 2022. The proportion predicting 2022 sales growth ranks higher than the 70% who began 2021 predicting sales gains for that year as a whole. Currently, only 2% predict sales declines while the remainder (18%) see no change.
MMAC/Business Outlook Survey – Page 2
Manufacturers expressed strong optimism, with 88% predicting 2022 sales growth versus 77% among non-manufacturers. By employment size, large employers (100 or more employees) are more likely to forecast 2022 sales gains than small employers, by an 87% to 77% margin (large versus small companies).
Profit expectations for area businesses also improved over the past year. Sixty-nine percent of those surveyed see profit level improvements in 2022, six percentage points higher than at the opening of 2021. Currently 10% see profit level declines while 21% expect no change. Manufacturers (78%) and large employers (78%) are most likely to predict 2022 profit gains.
Regarding capital spending plans, 48% of all companies surveyed forecast a rise in capital expenditures for the year. Only 7% percent see capital spending declines while 44% expect no change. The percentage predicting increases is up from the 36% who opened 2021 expecting capital spending gains. At present 53% of large employers predict increases in capital expenditures in 2022 vs. 46% among small employers.
Metro Milwaukee’s economy lost 112,400 jobs in the early months of the pandemic. Over time, 77,900 jobs have been recovered but a gap remains of 34,500 jobs. Survey results suggest confidence in future job increases, with 66% of all businesses expecting gains in their local workforces in 2022, outnumbering those predicting declines (2%) by a large margin. Thirty-two percent see no change.
A strong majority of employers see job gains regardless of industry or size of employer. Currently, 74% of manufacturers predict job increases during the calendar year 2022, over 10 percentage points higher than among non-manufacturers (63%). Sixty-eight percent of small employers predict 2022 job gains (vs. 63% for large employers).
Consumer price inflation nationally has risen sharply in recent months from a 1.4% year-over year increase in January 2021 to December’s 7% increase. Area businesses expect inflationary pressure to remain. Over one-half (51%) of all companies surveyed see 2022 inflation rates falling in the 3% to 5% range, but 37% expect price increases of 6% or higher. The 37% figure ranks considerably higher than one year ago when only 9% of those surveyed saw such gains.
MMAC/Business Outlook Survey – Page 3
First Quarter 2022 Expectations
Businesses are more tempered in their optimism toward 2022’s first quarter. Seventy-five percent of those surveyed expect first-quarter real sales gains (vs. 2021’s first quarter), lower than the 80% who predict sales increases for 2022 as a whole. Nonetheless, only 9% see first-quarter sales declines and 15% expect no change. Current quarterly sales expectations rank similar to those expressed in 2021’s fourth quarter when 76% forecast quarterly sales growth.
Businesses were slightly less optimistic toward profits than three months ago. Sixty-three percent see higher profits for the quarter (vs. 2021’s first quarter), only 12% predict profit declines. Twenty-five percent see no change. The percentage expecting profit increases rank marginally below the 67% who forecast fourth-quarter 2021 profit gains.
2021 finished with nine consecutive months of year-over-year job growth. Gains averaged 2.3% in the year’s final three months. Metro businesses expressed similar optimism toward 2022’s first quarter. Over half (53%) of all businesses surveyed predict first-quarter job gains for their local operations (vs. 2021’s first quarter), while only 4% see job declines. These percentages are up slightly from fourth quarter 2021 expectations. Three months ago, 49% forecast fourth-quarter 2021 job increases (vs. year-ago levels).
Manufacturers were particularly optimistic. Sixty-seven percent of manufacturers see employment increases in the first-quarter 2022 (vs. 2021’s first quarter) vs. 48% among non manufacturers surveyed. Larger employers (where 59% predict first-quarter job gains) were more optimistic than smaller employers (50% see such gains).
2022 Business Concerns
Businesses were asked to rank business concerns in 2022. Among the concerns listed, labor shortages ranked as the most concerning. This was followed by price inflation, continuing economic growth & recovery and supply chain issues. Concerns across industry and business size were fairly consistent. For manufacturers, the importance of supply-chain concerns rose to one of the top two concerns.
After nearly two years of disruption and uncertainty things may be slowing getting back to normal. The two COVID-19 issues listed among concerns – the effects of COVID-19 on future business activity and COVID-19 vaccine mandates – ranked lowest among the six rated concerns. #
Statistical table attached
MMAC’s First-Quarter 2022 Business Outlook Survey*
By Size By Industry
Firms expecting a: Large Small (1) Mfg. Non-mfg. TOTAL 2022 Forecast
Change in the dollar volume of
Sales (net of inflationary effects)
expected by 96 Milwaukee area RISE : 87% 77% 88% 77% 80% firms for the entire year of 2022 DECLINE : 0% 3% 0% 3% 2% vs. the entire year of 2021: NO CHANGE : 13% 20% 12% 20% 18%
Change in dollar volume of Profits
expected by 97 Milwaukee area RISE : 78% 65% 78% 66% 69% firms for the entire year of 2022 DECLINE : 0% 15% 11% 10% 10% vs. the entire year of 2021: NO CHANGE : 22% 20% 11% 24% 21%
Change in the dollar volume of
Capital Expenditures expected
by 97 Milwaukee area firms for RISE : 53% 46% 48% 49% 48% the entire year of 2022 vs. the DECLINE : 6% 8% 7% 7% 7% entire year of 2021: NO CHANGE : 41% 46% 44% 44% 44%
Rate of Inflation expected to affect DEFLATION 0% 3% 4% 1% 2% 97 Milwaukee area operations 0-2% INFLATION : 3% 14% 0% 14% 10% for the entire year of 2022: 3-5% INFLATION : 53% 49% 41% 54% 51% 6-9% INFLATION : 38% 26% 48% 23% 30% 10% or more : 6% 8% 7% 7% 7%
Change in the level of Total
Employment expected by 97 RISE : 63% 68% 74% 63% 66% Milwaukee area firms for the DECLINE : 6% 0% 0% 3% 2% entire year of 2022 vs. 2021: NO CHANGE : 31% 32% 26% 34% 32%
2022 First Quarter (Compared to Previous Quarter)
Change in dollar volume of Sales
(net of inflationary effects) expected RISE : 59% 51% 52% 54% 54% by 97 Milwaukee area firms for 1st DECLINE : 19% 20% 11% 23% 20% quarter 2022 vs. 4th quarter 2021: NO CHANGE : 22% 29% 37% 23% 27%
2022 First Quarter (Compared to Same Quarter One Year Ago)
Change in dollar volume of Sales
(net of inflationary effects) expected RISE : 81% 72% 81% 73% 75% by 97 Milwaukee area firms for the DECLINE: 9% 9% 4% 11% 9% 1st quarter 2022 vs. 1st quarter 2021: NO CHANGE : 9% 18% 15% 16% 15%
Change in the dollar volume of
Profits expected by 97 Milwaukee RISE : 66% 62% 56% 66% 63% firms for the 1st quarter 2022 vs. DECLINE : 3% 17% 7% 14% 12% 1st quarter of 2021: NO CHANGE : 31% 22% 37% 20% 25%
Change in the level of Total
Employment expected by 96 RISE : 59% 50% 67% 48% 53% Milwaukee area firms for the 1st DECLINE : 6% 3% 0% 6% 4% quarter 2022 vs. 1st quarter 20201: NO CHANGE : 34% 47% 33% 46% 43%
Change in the per person, RISE : 94% 88% 93% 89% 90% employee Wages & Salaries DECLINE : 0% 0% 0% 0% 0% expected in the next 12 months: NO CHANGE : 6% 12% 7% 11% 10%
MMAC’s First-Quarter 2022 Business Outlook Survey*
By Size By Industry
Firms expecting a: Large Small (1) Mfg. Non-mfg. TOTAL Business Concerns going into 2022
Average ranking of concern level Price inflation 3.00 2.86 2.74 2.97 2.91 ranked 1 to 5 with 1 being ranked Continuing economic growth
most concerning and 5 being lowest & recovery 3.80 2.86 4.04 2.81 3.16 ranked concern. Supply chain issues 3.16 3.30 2.22 3.66 3.25 Labor shortages 2.25 2.44 2.07 2.49 2.38 COVID-19 vaccine mandates 4.32 4.90 4.80 4.68 4.71 COVID-19 effects on future
business activity 4.06 3.94 4.81 3.65 3.90
* Percentages may not sum to 100 due to rounding.
(1) Employment of less than 100 persons