December 2004

Businesses Do Not Anticipate Strong Improvement in Local Economic Performance over the next six months

According to the December 2004 Business Outlook Survey a net 31 percent of respondents expect general business conditions to get better over the next six months. This is down from 35 percent in the September 2004 survey. Meanwhile, with regard to own activity, the net percent of reporting firms expecting to increase activity in the next six months remained at 41 in both the September 2004 and December 2004 surveys. The drop in confidence about general business conditions was most evident among finance and insurance, communications and information services, and real estate firms.

The December 2004 survey indicated that about 50 percent of reporting firms experienced higher sales and about 19 percent experienced lower sales in the past six months compared to sales in the first and second quarters of 2004. In addition, the past six months witnessed an increase in the percentage of firms indicating increased employee compensation from 42 percent to 51 percent between the September 2004 and December 2004 surveys.

Summary of Returns
December  2004

Survey Responses
Disaggregated by Sector/Activity

Summary:

After reaching a peak at the end of 2003, the past year has witnessed a gradual decline in business sentiment about conditions in the local economy. During 2004, the downward trend in business sentiment has been linked to several issues firms have consistently identified as important challenges they face. These include health care expenses for employees, quality of labor, competition from other businesses, and availability of employees. Interestingly, firms are more optimistic about their own prospects compared to what they think will be happening to the overall economy. The most recent survey found that 39 percent of reporting firms felt that future business conditions are likely to improve while 44 percent expect an expansion in the level of activity during the next six months.