Local businesses show strength on the actual expenditure and hiring; but not so sure when it comes to future plans

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 surveys. In July 2012 we conducted our 51st survey of this series.
The following is a summary of our findings The Overall Index of Purchasing and Employment Plans for the Lehigh Valley which showed a slight drop in April 2012, recorded a slight growth in July 2012. The July business sentiment index is not statistically different from its January or April 2012 levels. However, it is 7.7% above its July 2011 level. Last year, we observed local businesses becoming more optimistic in the 1st quarter, just to see this enthusiasm erode during the 2nd and the 3rd quarters. This year, we have again observed a significant increase in optimism in January. However, unlike last year, April and July’s data are not dropping, and if anything, the July index is indicative of resumption of growth.

While local businesses are not showing much improvement in their optimism about the future of the economy, their optimism about the last six months has been improving, to the extent that now the two indices are statistically equal. This is unusual since historically future’s index was significantly higher than the past index.

Disappointment with the slow economic growth is making businesses overly cautious. However, the data clearly indicates that despite all of this, businesses are planning to spend more and hire more employees in the next six months.