Businesses more optimistic about the future

KAA surveys Lehigh Valley businesses on a quarterly basis and collects around 700 observations per year. The Employment and Purchasing Index for the Lehigh Valley highlights the results of these suveys. In January 2013 we conducted our 53rd survey of this series. The following is a summary of our findings./p>

Business sentiment, as measured by the overall index rose to 58.8 in January 2013, a 2.7% increase over its October 2012 level. This index has been oscillating between 57.6 and 59.3 since October 2011.

The interesting thing in this data is more about the difference between businesses assessment of the past with their expectations of the future. While the two indices were crisscrossing since October 2011, They started to go their separate ways since October 2012, when the future index ended up 3.6% above the past index. The difference was significantly expanded in January when the future index rose by 12.8% above that of the past. This is the highest relative positive expectation about the future since January 2011 when the future index was 16.0% higher than the past. That was also the end of the upward trend in business sentiment that started in July 2009.

Local businesses plans for future hiring rose to 63.4 in January an increase of 4.8% above its October 2012 level. However, the largest increase in January belongs to plans for future purchases which leaped above its October observation by 8.9%. This index is now at its second highest level since before the Great Recession in October 2007.

Based on these data it is our expectations that, short of another dragged out political battle in Washington, business sentiment in the Valley will rise in the coming months, and with that will come more hiring and increased purchases. While “happy times” are not here again, they are not as far away as they were 3 months ago.