RESI Maryland Leading Index increases to highest level in two years

The RESI Maryland Leading Index increased 0.5 percent to 152.59 in December, up from the revised 0.4 percent decline in November.

December's index was 1.0 percent over 2002's index and is the highest the index has been since June 2002.

The increase in the index was driven by growth in construction activity, airport activity and durable goods sales.

However, the increase in the index was tempered by the decline in manufacturing activity and an increase in initial jobless claims.

Building permit activity in December rose a seasonally adjusted 33.3 percent, the fastest pace of monthly growth in over five years.

Consequently, the value of building permits in Maryland increased 49.2 percent.

In spite of December's rise in the number of permits issued, the average annual rate of gain in the number of building permits was lower in 2003 by 1.9 percent from the average in 2002.

However, average annual permit values rose for the third consecutive year, gaining 1.4 percent in 2003.

Maryland's housing market dynamic returned to form in December with increases in sales and prices while inventory declined. Home sales activity gained 9.3 percent in December, as 8,175 homes were sold in December.

Home sales prices resumed their upward trend with the average sales price gaining 5.5 percent and the median sales price gaining 7.3 percent for the month.

Despite the fourth consecutive month of housing inventory decline in Maryland, pending sales of homes grew by 2.7 percent in December and were 7.1 percent greater than December 2002.

Consumer spending for the month was mixed. Sales of durable goods, those expected to last three or more years, increased in December by 2.3 percent while sales receipts from department stores decreased by 0.3 percent. Sales for the year were up for both by 10.5 and 5.6 percent respectively.

After slipping in November, car sales were back on track with sales of new cars gaining 9.2 percent and sales of used cars up 8.8 percent for the month.

Traffic at BWI Airport was strong in December with gains in both passenger activity and freight shipments.

The number of passengers passing through BWI Airport increased by 3.2 percent in December and the average annual passenger traffic grew by 3.7 percent in 2003, rebounding from the average annual decline of 6.7 percent in 2002. Meanwhile, freight shipments increased 12.4 percent for the month, but the annual average dropped 8.5 percent for the year.

Maryland's job market is showing recent weakness despite an improving national economy. Total employment fell by 0.3 percent in December, the second consecutive monthly decline.

For the year however, Maryland payrolls increased 0.4 percent, gaining more than 9,000 jobs. Initial unemployment claims increased by 8.3 percent to 21,511 for the month as the amount of benefit payments increased 5.9 percent. Similarly, the state unemployment rate rose to 4.4 percent from November's rate of 4.1 percent.

After two consecutive months of growth, state manufacturing activity slowed down in December. The average weekly hours declined 0.5 percent to 39.8 from 40.0 hours in November.

John Hopkins is associate director of Applied Economics & Human Services at RESI Research & Consulting.

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