Economic Analysis - Maryland economy grows at fastest rate in nearly

The RESI Maryland Leading Index grew 0.8 percent in September, the highest rate of monthly growth experienced since June 2003, and up 2 percent from last September. Components of the index that contributed strength include falling jobless claims, improving welfare performance, as well as increased sales receipts, manufacturing and construction activity. A slowdown in airport activity was a weakness to the index.

Maryland saw improvements in both its job market and its labor market. Payrolls grew by 0.5 percent in September, rebounding from a loss of 0.6 percent in August. Total employment is 2.1 percent above last September, the fastest pace of 12-month job growth since February 2001. Labor conditions were also improved in the state as the unemployment rate dropped from 4.3 percent in August to 4.1 percent in September. The Baltimore Metropolitan Help Wanted Index dropped from 18 to 16 over the last month; however, the index is improved from last September's value of 15.

Initial unemployment claims dropped to 17,734 in September, an 8.9 percent decline and the lowest level of claims since May. Unemployment benefits paid dropped 24.8 percent for the month and were 36.1 percent below last September's benefit payments.

Sales activity increased in September as consumers made more purchases of both department store goods and durable goods for the first time since May. Sales of general merchandise, apparel and furniture (GAF) grew 4.7 percent in September and were 6.7 percent above sales from last September. Sales of durable goods were up 1.5 percent for the month and 10.5 percent over the last twelve months. Adjusted for inflation, sales of GAF and durable goods grew 1.4 percent and 4.6 percent for the month respectively.

After declining for the past two consecutive months, car sales rebounded in September. Sales of new automobiles were up 3.1 percent for the month. However sales over the last 12 months trailed by 1.5 percent, the third consecutive month of annual declines. Sales of used automobiles increased 5.6 percent for the month and were up 6.7 percent from last September.

Indicating that Maryland's housing market remains strong, home sales continue to grow while the inventories decline. Sales of existing homes grew 2.2 percent in September, even as pending sales dropped ever so slightly. The inventory of homes available for sale declined 2.0 percent, the second consecutive month of inventory contraction.

Strong housing demand continues to drive housing appreciation. The average sale price of homes sold increased 1.1 percent in September, and was up 18.5 percent since last September. The median home sales price grew 1.3 percent for the month and 19.8 percent over the last 12 months.

Building permits increased by 1.7 percent in September, the second straight month of permit growth. Despite dropping 0.4 percent for the month, the value of building permits were 22.5 percent above last September values.

Maryland's Temporary Cash Assistance (the state's welfare program) closure rate, the ratio of cases closed to cases paid, increased to 10.9 percent, the highest rate since June 2002. The number of recipients receiving assistance increased by 0.7 percent for the month, but caseloads remain 3.4 percent below last September levels.

John Hopkins is associate director of applied economics and human services at RESI Research & Consulting in Towson. Mr. Hopkins compiles Maryland economic data and writes this column for The Daily Record every month.

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