June 2025: 0.99% (C- grade)

Alabama inventionINDEX June 2025: 0.99% (C- grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Over the past 12 months, Alabama’s inventionINDEX has shown moderate fluctuation, with the most recent figure, 0.99% in June 2025, registering a slight decline from May’s 1.36%. This drop brings the index below the 12-month average of approximately 1.34%, signaling a short-term dip in inventive activity. While it remains within a normal range, the current score is notably lower than the 1.53% peak seen multiple times in early 2025 and late 2024.

A higher inventionINDEX score typically reflects increased innovation output, including patents filed, R\&D engagement, and technology development initiatives. When the index hovered around 1.53% from January to April 2025, it indicated a period of strong inventive momentum in Alabama, likely linked to expanded university-industry collaborations or public-private investments in advanced manufacturing and biotech. Such growth tends to attract new businesses, boost regional competitiveness, and generate high-quality job opportunities.

On the other hand, when the score dips-as seen in November 2024 (0.86%) and the current month-there is reason for concern. A lower index may suggest slowed innovation cycles, reduced patent activity, or a pause in funding. If the trend continues, it could undermine Alabama’s position in national R\&D rankings, making it harder to attract federal grants and private-sector interest. Consistency in innovation performance is often as important as periodic peaks.

Despite the recent decline, the broader pattern over the past year shows resilience. The state has experienced multiple months above 1.5%, with the October 2024 high of 1.74% marking a standout period. While June’s drop warrants attention, it should be viewed in context-a short-term fluctuation within a generally stable innovation trajectory. Moving forward, sustaining policies that encourage invention and tech transfer will be essential to maintain momentum.

Discussion:

In June, the Alabama inventionINDEX scored a negative sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Alabama office provides R&D tax credit consulting and advisory services to Birmingham, Montgomery, Mobile, Huntsville, Tuscaloosa, Hoover, Dothan, Auburn, Decatur and Madison.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

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