Maryland economy suffers largest setback in nearly two years

The RESI Maryland Leading Index declined 0.6 percent in April, the largest drop since July 2003. During the past 12 months, however, the index has increased 2.3 percent.

Components of the index that contributed to April's monthly decline include manufacturing, airport activity, construction and welfare. Unemployment claims and sales tax receipts were the positive components.

Maryland's employment situation continues to improve. Almost 8,000 jobs were created in April, representing the highest level of job creation recorded since October. Jobs expanded at a 0.3 percent rate for the month. Over the past 12 months, more than 55,000 jobs have been created (an increase of 2.2 percent). The unemployment rate held steady at 4.3 percent as the labor force continues to grow.

Initial unemployment insurance claims decreased 9.7 percent for the month and were down 12 percent from claims levels 12 months ago.

The amount of unemployment benefits increased slightly for the month, but was down 11.4 percent from last April.

Sales tax receipts rebounded in April from March's decline. Receipts on the sale of durable goods, items intended to last three years or longer, increased 2.2 percent for the month and were up 10.7 percent from last April.

Sales of general merchandise, apparel and furniture increased 0.6 percent for the month and were up 6.3 percent from 12 months ago.

Recent increases in consumer spending, however, did not translate into the auto sector. Sales of new and used cars were down for the month by 2.6 percent and 8.1 percent respectively.

The Maryland housing market is showing possible signs of weakening. Home sales dropped 0.2 percent for the month, yet were still better than last April by 3.7 percent.

Moreover, April marked the second consecutive month of declining sales, and five of the last seven months have recorded sales declines. Pending sales ended a three-month slide, increasing 5.9 percent in April. Almost 13,800 homes were available for sale in April, a gain of 4.5 percent from last month and the highest level since December.

Home values continue to appreciate at a strong pace. The average home price reached over $331,000 for the month, an increase of 1.9 percent in April and 21.2 percent over the last 12 months. The median home price gained 2.8 percent for the month and was up 28.5 percent from last April.

Residential building permits dropped in April by 4.8 percent, yet still were 13.9 percent higher than the level issued a year ago. Accordingly, the value of residential building permits declined 5 percent for the month, but was up 25.2 percent from last April.

Passenger activity at BWI airport dropped 6.2 percent in April, the largest monthly decline since February 2003. Compared to last year, passenger traffic was off 13.6 percent. The amount of freight passing through the airport was stable for the month, gaining 0.7 percent.

Average weekly manufacturing hours dropped to 39.9 in April, a decline of 0.6 hours and the lowest weekly average recorded since September of this year.

The number of recipients receiving Temporary Cash Assistance (TCA), the state's welfare program, declined 1.3 percent in April, representing the fourth consecutive monthly decline and 10.5 percent below the number of recipients from a year ago.

John Hopkins, the associate director of applied economics and human services at RESI Research & Consulting, analyzes Maryland's economy every month for The Daily Record. The opinions expressed are his own. He can be reached at 410-704-6342.

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