March 2005

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

According to the March 2005 Business Outlook Survey a net 13 percent of respondents expect general business conditions to get better over the next six months. This is a dramatic decline from 31 percent in the December 2004 survey. With regard to own activity, the net percent of reporting firms expecting to increase activity in the next six months also dropped from 41 in the December 2004 survey to 34 in the March 2005 survey. The drop in confidence about general business conditions was most evident among health care, professional and scientific services, and manufacturing firms.

The March 2005 survey indicated that about 57 percent of reporting firms experienced higher sales and about 25 percent experienced lower sales in the past six months compared to sales in the second and third quarters of 2004. In addition, the past six months witnessed an increase in the percentage of firms indicating increased employee compensation from 51 percent to 54 percent between the December 2004 and March 2005 surveys.

Summary of Returns

Survey Responses
Disaggregated by Sector/Activity

Summary:

After reaching a peak at the end of 2003, there has been a persistent downward trend in business sentiment about conditions in the local economy. Within the past two quarters, 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. Consistently, over the past year, 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 27 percent of reporting firms felt that future business conditions are likely to improve while 42 percent expect an expansion in the level of activity during the next six months.