Md. gets lower marks in survey Companies less optimistic about hiring, revenue

'Business-friendly' rating falls

Economy

July 22, 1998|By Jay Hancock | Jay Hancock,SUN STAFF

A quarterly poll suggests that some companies have soured on their expectations for Maryland's economy and on their view of the state as a business home. But more than a third of those surveyed still rated Maryland "business-friendly."

In the survey, conducted by the University of Baltimore, 21 percent of companies queried described Maryland as "anti-business" or "business unfriendly," up from 15 percent at the end of 1997. The percentage of companies rating Maryland "business-friendly" fell from 51 in late 1997 to 43 now.

Possible reasons for the change, said analysts at the university's Maryland Business Research Partnership, were the recent resignation of James T. Brady as Maryland economic development secretary and the apparent leveling off of Maryland's job growth.

In departing, Brady harshly criticized Gov. Parris N. Glendening, saying the governor had backed away from his promise to be "unabashedly pro-business." Several Glendening moves have disappointed business interests, including the grant of union bargaining rights to state employees and opposition to the Inter-County Connector, a proposed "outer beltway" highway outside Washington.

Maryland's economy is an issue in this year's gubernatorial campaign, with Republican candidate Ellen R. Sauerbrey and Democrat Eileen M. Rehrmann challenging Glendening's economic leadership.

The Maryland Business Research Partnership surveys top executives at 250 Maryland companies every three months. The latest results come from queries in the second quarter.

The number of companies reporting increased revenue in the study declined in the second quarter to 57 percent from 66 percent at the end of 1997.

Expectations for sales and hiring dropped, too. Fifty-five percent of the companies polled expect revenue increases in the 12 months, down from 74 percent six months ago.

Forty-two percent anticipate increased employment, down from 56 percent at the end of last year.

The results mesh with other data suggesting moderation in Maryland's healthy growth of recent months.

Maryland-based employment, for example, has stagnated for much of the year, according to the U.S. Labor Department.

But economists say many other indicators -- home sales, personal income, retail sales, unemployment, tax collections -- indicate that the state is booming.

"Unemployment is very low. Businesses seem to be doing fine," said Charles McMillion, chief economist for MBG Information Services, a Washington-based consulting and forecasting firm.

"These are very good times, particularly compared to where Maryland has come from over the last seven or eight years," McMillion said.

Some analysts believe Maryland's official job-growth figures will be revised upward, as they have been for several years.

"I don't think those numbers are necessarily reflective of what's going on in the economy," said Mike Funk, an economist at Towson University who follows the state.

"There's nothing else in the economy that suggests anything like that has happened," Funk said of the job-growth sluggishness. "Obviously, the consumers feel pretty good about what's going on in the economy."

Maryland businesses continue to have trouble finding qualified workers, the University of Baltimore's survey found. Sixty percent reported labor shortages, up from 56 percent in the first quarter.

Income tax rates remain businesses' biggest complaint about Maryland's economic situation, the poll found.

Pub Date: 7/22/98

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