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The University of Alabama

Economic Forecast from UA’s CBER Optimistic as State Job Growth Continues

TUSCALOOSA, Ala. — Alabama job growth continues to pick up from the slow pace seen in the first half of 2014, according to data from the Center for Business and Economic Research at The University of Alabama.

The state gained a net 28,600 jobs from March 2014 to March 2015. Goods producing firms added 1,300 workers while service providing firms gained 27,300.

Goods producing businesses with the largest job gains were motor vehicle parts manufacturers (1,600 jobs) as well as primary and fabricated metals industry and motor vehicle manufacturers (1,100 jobs each).

Nondurable goods manufacturing in the state experienced a net loss of jobs, with paper manufacturing losing 700 workers, and textile mills, textile product mills, and apparel manufacturing shedding another 900 jobs.

Food manufacturers also lost 2,100 net jobs. Almost all of those jobs were in animal slaughtering and processing, a decrease most likely due to the decline in exports that caused cutbacks in production.

Job gains in the state’s services sector were spread across most industries. Professional and business services gained 8,400 jobs, leisure and hospitality sector added 6,700, educational and health services gained 5,700 workers.

Increased consumer spending and demand triggered job gains among retailers, including 1,300 new jobs in motor vehicle and parts dealers and 900 jobs in general merchandise stores.

In the government sector, the state added 600 and local government entities gained 500 jobs, while federal payrolls lost 200 jobs.

Economists from the Center for Business and Economic Research in UA’s Culverhouse College of Commerce have improved their annual forecast for inflation-adjusted Alabama gross domestic product – GDP in 2015. The state’s GDP is expected to increase by 2.5 percent to around $190 billion, up 2.0 percent from 2014.

Industries such as automotive manufacturing, aerospace, tourism, healthcare and biotechnology are expected to remain major economic drivers.

Alabama employment is expected to increase by about 1.5 percent in 2015, a stronger gain than the 0.7 percent increase seen in 2014. The state should create about 30,000 to 35,000 new jobs this year.

Overall job growth is expected to remain sluggish for some industries, specifically those with higher exposure to international trade, despite the rapid increase in payrolls seen in some sectors of the economy, mirroring a national trend.

The Alabama Business Confidence Index, or ABCI, reflected improving statewide economic conditions coming at an optimistic 57.6 on the second quarter 2015 survey. This is 0.2 points higher than last quarter and 2.0 points more than the ABCI of 55.6 recorded a year ago.

Most component indexes increased this quarter with the strongest gains in expectations for sales and hiring. The national economy index gained 0.1 points to 56.5, remaining the most optimistic outlook for U.S. economic growth since the second quarter of 2006.

About 42.0 percent of the state’s business executives expect the U.S. economy to expand at a faster pace than in the first quarter of 2015, and another 39.7 percent think growth will be about the same.

Business executives expect Alabama’s economy to see solid gains in the second quarter of 2015. At 58.4, the index is up 1.0 points from last quarter and has now experienced eight consecutive quarters of positive confidence.

With the state’s economy expected to grow at a faster pace in 2015 than in 2014, overall state tax receipts are estimated to rise by 3.5 percent in FY2015.

If consumer spending and jobs growth continue on their present trends, the rate of growth could be in excess of 4.5 percent. Individual income tax receipts could increase 4.0 percent, and sales tax collections could be up 3.0 percent.

REPORT: For more on the second quarter 2015 U.S. and Alabama economic outlooks, read the current issue of  “Alabama Business” at

The Center for Business and Economic Research at The University of Alabama was created in 1930, and since that time has engaged in research programs to promote economic development in the state and provide economic and demographic forecasting, data and analysis. Forecasts are a product of the Center’s Alabama Econometric Model.

The University of Alabama, a student-centered research university, is experiencing significant growth in both enrollment and academic quality. This growth, which is positively impacting the campus and the state's economy, is in keeping with UA's vision to be the university of choice for the best and brightest students. UA, the state's flagship university, is an academic community united in its commitment to enhancing the quality of life for all Alabamians.