The Kamran Afshar-Greater Lehigh Valley Chamber of Commerce survey of Lehigh Valley businesses is regularly conducted on a quarterly basis and about one thousand observations are collected per year. The Employment and Purchasing Index for the Lehigh Valley highlights the results of these surveys.

In July 2014 we conducted our 59^th survey of this series which recorded continued cautious optimism in the local economy.

Who do we survey? We survey businesses large and small and in a variety of different lines of business; around a third of our respondents are businesses with less than 6 employees. Half of the respondents have between 6 and 50 employees and a quarter of them have more than 50 employees.

Business sentiment, as measured by the overall index rose to 59.8 in July 2014, a significant increase over April 2014, the 2^nd highest level for the index since 2007.

The index shows the percent of businesses whose business sentiments are positive. Accordingly, any index above 50 means that more than half of the participants were positive about the economy. The July overall data shows around 60% of the participants were positive about the economy.

Participants’ expectations of the future rose by a strong 10.9% in July.

The largest gain in July was in the index of plans for expenditures in the next 6 months. This index soared by 12.5% over its April level. This is the third highest level for this index since the 2007.

The index of plans for future expenditures rose sharply to 61.5 in July, this was a welcome news after this index dropped significantly over the last 9 months.

The average business participating in the survey was planning to increase their expenditures by 1.7% in the next 6 months. The trend for this indicator has been rising since 2012.

The index of actual expenditures over the last 6 months rose slightly in July. This index, after its post-recession sharp rise start dropping in 2012 and has been going sideways since 2013.

The index of actual purchases in the last 6 months represents “where the rubber meets the road.” An average company participating in our July 2014 survey reported 1.9% increase in their expenditures. The trend for this index has leveled off at around 1.7% since 2013. This number used to be around 3% in the pre-necessary years.

The index of actual hiring during the last 6 months was the only index in the group that dropped. Despite of that, its trend has been slowly rising since last July. Local businesses have also raised their hiring levels from around 0.4 employees for the last couple of years to 0.7 employees as of July 2014. This basically means that while the percentage of the companies that are hiring has slightly dropped, those who are hiring, are hiring more people.

The percentage of the companies which increased their employment has been exceeding those who reduced theirs since April 2010. And in general, the percent of businesses increasing employment has risen more than those decreasing since the end of the recession.

The index of planned hiring for the next 6 months rose to 64.1 in July, this was a strong 9.4% growth for the index. This index has moved very close to the expansion zone which will happen when the index moves above 65.

The average business participating in the survey is planning to hire 1.1 more employees in the next 6 months. We have not seen sustained plans to hire more than one employee since before the Great Recession. This is a significant increase and promises higher employment levels for the 2014 and 2015.

The percentage of companies which are planning to increase their employment in the next 6 months rose to 35%, compared to 7% who are planning to reduce employment at their site. This is also a very positive indicator for future employment.

Construction businesses participating in the July survey indicated that they are planning to reduce their employment in the next 6 months. This was the only category that is planning to reduce employment. Accommodation and food industries lead the rest of the local businesses in their expansion plans for the next 6 months.

The survey also shows that among different size businesses in the Valley, a larger percent of those who employ between 21 and 50 people are planning to increase their employment in the next 6 months. And as has been the case over the last years, the least optimistic group in the category are businesses with less than 6 employees.

Based on the data over the last 12 months we expect the Valley’s economy to show moderate growth over the next 6 months. Companies with 21 to 50 employees will lead the growth, expanding at a higher rate than others. And employment is expected to show a higher growth rate over the next 6 months than before.