03 Dec First Business Bank economic survey of Dane County reveals downturn has hit area
Madison, Wis. – Dane County businesses continued to feel the effects in 2008 of an economic downturn that began in 2007, and business owners are pessimistic about prospects for 2009, 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-Madison and the University of Wisconsin-Madison School of Business, showed that all business sectors reported declines in seven primary economic indicators – 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.
Hardest hit was the service industry, where an all-time high of 28 percent of businesses reported a decrease in employees.
In addition, 44 percent of businesses, the highest level in the survey’s history, reported that they were unable to meet expectations for 2008, and that trend is expected to continue in 2009. The percentage of firms that met expectations was about 19 percent, compared with 44 percent who did not exceed expectations. The reasons cited for the low performance were: rising gas prices; higher operating costs; domestic sales shortfalls; and rising raw materials costs.
“It’s not surprising that these negative actuals for 2008 have created pessimistic expectations of future performance in 2009,” the report said. “The percent of companies which expected to do better in the future has reached its lowest level ever at 60 percent compared with last year’s 81 percent.”
The report added: “Rising gas prices, rising raw materials costs, sales shortfalls and higher operating costs were some of the key reasons cited for poor performance by many companies. The reasons cited for this future outlook was the slowing economy, expected decrease in consumer spending and the continued slowdown in the housing market.”
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 built-in economic advantages such as government and technology, Dane County is not immune from national economic news,” Meloy said. “The report shows economic events have generated pessimism among area employers.”
Scott Converse of the UW-Madison School of Business said the report was not a surprise.
“As we’ve watched the economic slowdown take place on a national level, it seemed natural that eventually that trend would present itself in Dane County,” Converse said. “This detailed report shows that the downturn has hit several of the Dane County economic sectors and is a continuation from last year’s results.”
The report also revealed:
- The percentage of companies which projected decreased sales revenue for 2009 was the worst projection to date and was almost triple the projection for 2008.
- The profitability of all firms declined significantly, as more companies reported a decrease in actual profitability as well as projected profitability for 2009.
- The projection for 2009 suggests that the hiring situation will remain negative as the number of businesses that expect to decrease their number of employees increases significantly.
- Wages have not shown any changes between 2007 and 2008 and there are no significant changes in projected wages for 2009.
First Business Bank has been conducting the economic survey of Dane County for the past six years. The survey was based on the responses of 488 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 “featured links” at http://www.firstbusiness.com.
About First Business Bank
First Business Bank, part of First Business Financial Services, Inc., (NASDAQ: FBIZ), 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 loans; treasury management products and remote deposit; Internet banking; retirement plans/investment management services/trustee services; asset-based lending; and equipment finance and leasing.