Baltimore business outlook improves Survey finds signs of recovery

December 19, 1992|By Kim Clark | Kim Clark,Staff Writer

A survey of chief financial officers in the Baltimore area has found additional evidence of economic improvement, but also reveals lingering warning signs that the recovery remains fragile.

In the first of what he expects to be semiannual surveys of at least 700 area businesses, University of Baltimore economist Michael A. Conte found the local economic landscape was a bumpy patchwork: valleys of gloom next to peaks of optimism.

"There is clear evidence of a turnaround," Mr. Conte said of his TC survey released yesterday. "But it is not as strong as prior recoveries."

Although sales and profits were both up slightly this summer, employment declined.

There was no joy in a few industries, such as finance, insurance, real estate and transportation, all of which reported decreases in sales.

The big winners appeared to be service businesses, which saw their revenues jump 9.5 percent from last summer. One of the hottest service sectors is medical services, the survey found.

And small companies reported faster growth than larger ones.

Importantly though, almost all of the executives, even those who reported a drop in sales, were optimistic about the future.

Service companies expected growth to remain at its robust pace, while those in finance and real estate expected smaller losses.

One important sign of hope: Manufacturers, retailers and small service companies all reported they planned to advertise more in the near future.

"The advertising outlook shows a sense of optimism," Mr. Conte said. "If you don't think there is a market, you don't advertise."

But the survey also revealed two worrisome trends: More than two-thirds of the companies surveyed reported relying on government contracts amid defense budget cuts, and local business people say banks continue to keep a tight lid on credit.

But almost half of the government contractors in the area only do civilian work, and many of those contracts are rising.

Although companies were benefiting from lower interest rates,

they were finding it more difficult than ever to get a loan, Mr. Conte said. More than one-third of the executives said they expected the clampdown to worsen.

Tom Hartnett, vice president of Mastercare Services Inc., a Timonium-based medical billing firm, agreed with the survey.

His 3-year-old company was turned down by local banks for expansion loans this year, he said.

He said demand for financial and administrative services for physicians was booming -- he increased his staff by three to 18 this year -- but he wasn't able to expand as much as he'd wanted because he couldn't borrow, he said.

"We have a lot of inquiries. . . . We are continually looking for sources of funding," he said.

The survey, funded and assisted by Baltimore Gas & Electric Co., was started because of a lack of reliable, up-to-date economic data on Baltimore, said Charles Boyd, BG&E's staff economist.

Government statistics are often revised significantly months after they are initially released, and much of the data forecasters need to know, such as profitability of local enterprises, isn't available.

"We thought it was very important information to have in these uncertain times," Mr. Boyd said.

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