There is good news for the Huntsville metro headed into 2022. The economic outlook is at an all-time high while unemployment is at an all-time low of 2%, coming in at 1.5% above pre-pandemic levels.
According to numbers presented by Ken Smith, senior director of Research and Information Services at the Huntsville-Madison County Chamber of Commerce, consumer demand is high, especially in housing; commercial activity has expanded; energy sectors rose to meet demand and banking conditions remain steady due to consumer and residential loan growth.
Furthermore, Huntsville’s metro is currently outpacing the growth of the U.S. economy, and Moody’s predicts Huntsville will continue to do so with employment growing at a rate of 9.1% over the U.S. prediction of 3%; and Huntsville’s GDP is expected to grow at a rate of 22.2% compared to the U.S. GDP at 12.3% over the next five years.
Their employment forecast shows Huntsville will not only prove to be an above-average performer in the short term because of the strength of the city’s manufacturing and federal government sectors, but they will skew towards higher-wage jobs. In the long term, Huntsville benefits from a high-quality workforce and strong population growth as shown in the recent census numbers.
When broken down by industry, Huntsville is up +800 jobs in both the construction and manufacturing industry; up +1,000 jobs in the government sector; +1,500 jobs in retail; and +2,000 jobs in professional and business services. They also show small gains in information and finance.
However, there are some challenges ahead.
There is a strong demand for labor, but the labor supply is tight. The manufacturing sectors are healthy, but supply chain shortages are disrupting it. Raw material prices increased due to those supply chain shortages, and transportation activity is strong, but there is a backlog of shipping and trucking containers.
The agricultural outlook is mixed as supply chains and labor shortages affect margins; and while the increase in interest rates led to higher home sales, they were lower than record highs and seem to have been driven by a fear they will increase again soon.
In terms of jobs, Huntsville is still down -1,100 jobs in education and health services, and -700 jobs in leisure and hospitality, compared to pre-pandemic levels.
Finally, the Federal Reserve is looking at interest rate increases in 2022 as record inflation concerns become a reality for consumers. No longer considered transitory, the Federal Open Market Committee is expected to speed up the end of its bond-buying program to allow for those interest rate increases.
“The Chamber partners with the University of Alabama’s Culverhouse College of Business to produce what is called the Alabama Business Confidence Index,” said the Chamber’s Ken Smith. “We track it quarterly and ask our local business owners and company executives to respond to a survey asking, what is the expected outcome for industry sales, profit, hiring and capital expenditures for the next quarter?”
Overall, the metrics skewed positive headed into the COVID pandemic, dropping precipitously during the height of the pandemic 2nd quarter of 2020. Confidence steadily improved throughout 2021, falling slightly during 4th quarter 2021.
“It will be interesting to see what the expectations will be going into the 1st quarter of 2022,” said Smith.
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