Business sentiment up in October 2014

The Kamran Afshar-Greater Lehigh Valley Chamber of Commerce survey of Lehigh Valley businesses is regularly conducted on a quarterly basis and about 800 observations are collected per year. The Employment and Purchasing Index for the Lehigh Valley highlights the results of these surveys.

In October 2014 we conducted our 60th survey of this series which recorded an increase in 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. Four out of every 10 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 63.6 in October 2014, a significant 6.4% increase over its July 2014 level. The index has now reached its highest level 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 October overall data shows around 64% of the participants were positive about the economy.

The largest gain in October was in the index of actual purchases over the last 6 months. This index soared by 9.9% over its July level. This is also the highest level for this index since the 2007.
past purchase

The average business participating in the survey increased their expenditures by 3.5% in the last 6 months. The trend for this indicator has been rising since 2013.

The index of expenditure plans for the next 6 months also rose by a significant 8.1% in October. An average company participating in our October 2014 survey reported 2.8% increase in their expenditures plans. The trend for this index has also been on the rise over the past 2 years.

The index of actual hiring during the last 6 months rose by 4.9% over its July level. This is also a significant increase, although it is rising only half as fast as the purchasing indicators growth. Local businesses have also raised their hiring levels from around 0.4 employees for the last couple of years to 0.9 employees as of October 2014.
hired -6

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 66.0 in October, this was only a 3.0% growth for the index. However, it pushed this index into the expansion zone. Historically, when this index was above 65, local employment expanded at a healthy clip.

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

The percentage of companies which are planning to increase their employment in the next 6 months was 30.9% in October, this compares with 6.1% who are planning to reduce employment at their site. This is also a very positive indicator for future employment.

Businesses participating in our October survey experienced an increase in revenues in the last 6 months and expect their revenues to increase further more in the next 6 months.

Based on the data over the last 12 months we expect the Valley’s economy to show better than 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.