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BUSINESS OUTLOOK UPBEAT AMONG MIDWEST EXECUTIVES

 CLEVELAND, Feb. 2 /PRNewswire/ -- Not only is the recession over, but the recovery as well, according to a Society Bank survey of Midwest business executives. Complete results of the survey are published in the winter 1993 issue of "Regional Review," a publication produced by Society's Economics Department. The "Review" also discusses the outlook for 1993 in "The Prospects for Regional Business for 1993: A Perceptible Pickup in Activity."
 Regional Business Conditions
 "Regional business conditions have been looking up. Consumer confidence throughout the Midwest has bounced back strongly, suggesting that the surge in retail sales seen late last year can be extended this year," says Kenneth T. Mayland, Society's chief economist. Sentiment about future economic prospects among companies participating in the survey has also leapt throughout the region.
 "As a result of the steady rebound in business conditions, the majority of business executives are now confident enough to make the important proclamation 'the recession is over,'" Mayland says. During the past few months, 62 percent of the durable goods manufacturers responding to the survey reported improved business activity. Business activity was also strong among respondents involved in wholesale trade. In contrast, construction members reported a light improvement in activity. Company performance also varied according to size; more medium-sized companies (sales between $5 million and $20 million) said business conditions had improved over the past four months.
 The improvement in business activity appears to be prevalent in virtually every corner of the coverage area. The pickup looks particularly strong in central Ohio (including Columbus), as 67 percent of those responding from that region said that conditions facing their business had improved over the past four months. The improvement was also pronounced in Indiana.
 Benefiting from the robust export business and the stabilization of the automobile markets, growth of industrial production in Ohio continues to outpace that of the United States. The most recent reading in October has Ohio production up 1.4 percent over the past 12 months, compared to the 0.8 percent national figure. The positive regional relative performance is much more noticeable in the retail sector. In the 12-month period ending October, Ohio retail sales leapt 13.3 percent, compared to the 6.9 percent gain for the nation.
 According to Mayland, housing activity in the region also continues to show positive variance with the rest of the country. Housing permits in the Great Lakes region advanced 18 percent in the third quarter of 1992 from a year prior levels, compared with the 12 percent gain for the U.S. The pickup in housing activity is especially strong in Cleveland and Cincinnati.
 As judged by the Survey Board, manufacturing should be the engine for growth within the regional economy for the next four months, followed by wholesale trade and the finance and services segments. Sixty-eight percent of the responding manufacturing firms believed their conditions would improve over the next four months; only 5 percent thought their business would worsen during that time frame.
 "Considering everything, it is clear that the economic recovery accelerated some over the past few months," Mayland says. "Regional economic activity is not expected to boom, but most metropolitan areas in the region should be posting employment increases."
 Prospects for Regional Business in 1993
 "Not only have the high economic potentates determined that the recession is over, but that the recovery is over as well," says Mayland. "Once the economy gains back all the recession-related losses in output, the recovery is concluded and business enters the 'expansion' phase."
 The recovery proceeded even without receiving any significant fiscal attention. Retailers appear to have their best holiday selling season in years. Production is on the rise and the unemployment rate is in retreat. Against a backdrop of very low interest rates, the stage seems set for a truly perceptible 1993 improvement in the regional and national business climates.
 Mayland predicts that 1993 will be a better year than 1992, and probably the best year since 1988. "The economic uncertainties in recent years have caused consumers and businesses to delay buying, where feasible, until better times. The resulting backlog of intended purchases creates a huge potential to fuel a prolonged expansion of the economy."
 Mayland summarized the 1993 outlook by sector:
 Consumer spending: The resurgence of consumer demands that began in 1992 is likely to spill over into 1993. Stronger confidence levels, sounder consumer finances and historically low interest rates all aid the consumer spending cause.
 Housing: After two years of steep increases in new homebuilding activity, the bulk of the housing recovery is behind us. Better consumer confidence levels and the chance for slight additional reductions in mortgage rates could allow some 1993 gains in new home construction.
 Business investment: Capital spending on equipment will vie for the role of the economy's best performing sector in 1993. Spending is being spurred by a compulsion to improve productivity and it is being aided by burgeoning cash flows and dirt-cheap financing rates.
 Exports: Many "experts" look for U.S. exports to weaken in 1993 because of recessions in Europe and Japan. This logic omits the fact that the Canadian economy -- America's largest trading partner -- should be rebounding in concert with the U.S. Furthermore, the Mexican economy -- which is becoming increasingly important to U.S. exports -- will continue to grow in 1993 at prodigious rates. The growth in exports will be particularly beneficial to the heavily industrialized economies of Ohio, Michigan and Indiana.
 Government: Austerity aptly characterizes the tone of state and local government involvement in the economy at large. The rise of unemployment since 1990 has pinched tax collections, forcing the adoption of economy meas in 1994.
 Inflation: Inflation has moved to the back burner as an economic issue. Each approach to anticipating inflation trends all point to a halcyon inflation environment in 1993. Barring wars, droughts or OPEC events, consumer prices should advance just 3 to 3.5 percent in 1993.
 Interest rates: With an unemployment rate in the neighborhood of 7 percent, the Federal Reserve will not be in any hurry to raise interest rates. Tightening measures should only be instituted when clear evidence of upward price pressures develop, which will not occur until the economy records a substantial amount of growth. Therefore, interest rate increases will probably come later rather than soon, and should prove to be modest.
 As the year 1993 opens, companies face a different challenge than they did in 1992 (the recession). With the expansion getting more robust, fending off the domestic competition becomes the chief concern for 1993. Meeting the increased costs of wages and benefits and finding qualified workers are also major business issues.
 The "Regional Review" and findings from the survey are contained in the winter 1993 edition. Society's Survey Board consists of Midwest business executives from manufacturing, construction, wholesale trade, retail trade, finance, mining and service industries in Ohio, Michigan and Indiana. Seventy-three percent of the participating executives are associated with companies that have annual sales less than $20 million. In all, 573 executives participated in this most recent survey.
 -0- 2/2/93
 /EDITOR NOTE: To receive a copy of the "Regional Review," contact the Economic Division of Society National Bank, 216-689-3741/
 /CONTACT: Mindy Samay of Society Corporation, 216-689-7195/
 (SCY)


CO: Society Corporation ST: Ohio IN: FIN SU:

KK -- CL008 -- 1761 02/02/93 10:39 EST
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