July 19, 2011
Contact: University Relations
The second-quarter Maryland Business Climate Survey, produced by the University of Baltimore's Jacob France Institute in the University's Merrick School of Business, shows state businesses' revenues, employment—and, most importantly, expectations—continuing to rise. But while a significant majority of polled business owners are sustaining the first quarter survey's optimism, the latest results indicate a noticeable level of uncertainty, or diminished expectations, about Maryland's long-term economic recovery.
"This is the 'ups and downs' part of a long, long recovery from a significant downturn —that period where you're wise to be wary, if you're a business owner, of just about anything that looks even a little negative," said Richard Clinch, director of economic research at the Jacob France Institute. "There continue to be signs of the national recovery that is needed for Maryland's economy to grow; however, businesses seem to be responding to continued uncertainty about the federal debt ceiling, long-term federal spending trends, and the international—mainly European—recovery with caution about hiring and growth in the near term."
Clinch noted that in the second quarter of 2011, Maryland firms reported steady sales and employment growth surpassing the previous quarter's results. But sales gains were uncomfortably close to sales decreases—39 percent of firms saw gains, while 33 percent saw decreases—and employment continued to grow but not robustly, with 27 percent of survey participants increasing their number of employees while 20 percent decreased their number.
Still, the state's rebounding economy is producing positive results, such as a long-term need for workers. In the second quarter, 33 percent of surveyed firms reported experiencing worker shortages. This is up slightly from the first quarter of 2011, but it remains lower than the 38 percent of firms that saw worker shortages last year.
"We may see a workforce shortage increase as the economy continues its comeback," Clinch said. "Forty percent of the firms in our survey reported having both long- and short-term shortages of workers—that's significant."
Overall, businesses across the state expect the market for their products and services to continue to expand in the second half of 2011; 67 percent are looking for improved revenues, while only eight percent expect their revenues to decline. This is an exact match of the results from the first quarter's report, and another sign that the economy is getting better overall.
"When we note the same expectations quarter after quarter, it indicates an overall sense of stability among business owners," Clinch said. "That could help explain why the bumps in the road feel worse than they really are."
Every quarter, the Maryland Business Climate Survey takes the pulse of the state's economy by surveying 250 Maryland companies, gathering data on employment, sales, the availability of skilled workers, the ability of businesses to compete, and so on. The survey is produced by the non-partisan Jacob France Institute, the economic research arm of UB's Merrick School of Business.
The University of Baltimore is a member of the University System of Maryland and comprises the School of Law, the Yale Gordon College of Arts and Sciences, the College of Public Affairs and the Merrick School of Business.