July 2015
Economic Pulse:Maryland business activity strengthened in June
Mikra Krasniqi is an economist at the Maryland Department of Business and Economic Development.
The Federal Reserve Bank of Richmond's "Maryland Survey of Business Activity" showed solid activity and improved business conditions and expectations in the State last month. The regular survey provides information on overall business activity including sales, investment in new equipment, software, and inventories. Respondents also provide information on employment trends, wages, business costs, and prices.
The June survey results revealed that general business conditions index registered 31, the same as May index but more than twice April's 13. (The index is equal to the percentage of firms that report an increase minus the percentage reporting a decrease.) The Sales index registered 18 the index was slightly higher in May, but registered a 0 in April. Business spending on equipment or software increased by 10 points to 29 a sign of solid growth of business investments as 31% of firms in the survey responded to have increased spending on this category.
Buoyed by strong hiring over the last couple of months, labor market conditions also registered significant improvement; the employment index rose to 25, which is also the average of the last few months. About 39% of survey respondents declared that they hired more workers during the month while 14 % said that they reduced employment. It's important to note that prior to December of last year, labor market index had averaged 23, for ten straight months. About 35%, of firms expected to hire in the next six months while 21% expected to downsize.
Table 1: Business Activity Index in Maryland for June, 2015
Source: The Federal Reserve Bank of Richmond Regional Survey of Business Activity
Sales index and future expectations
The sales index registered 47 while 61% expected increasing sales in the next six months. Also, 50% of survey respondents expected business conditions to improve in the coming six months. Overall, June's results show Maryland's economy continues to improve over the long run. All major business indicators, such as sales, business investment, capital spending, and hiring, were strong while future expectations showed positive trends.
Figure 1: General Business Activity Index for Maryland (June, 2014-June, 2015)
Source: The Federal Reserve Bank of Richmond Regional Survey of Business Activity
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