The Mid-Atlantic economy has continued to follow the moderate growth trend of the past year. During the 12 months ending in March 1998, nonagricultural wage and salary employment in the region totaled 12.6 million, a 1.6-percent increase from the previous 12-month period. The unemployment rate in the region as of March 1998 stood at 4.7 percent, down slightly more than 0.5 percentage point from a year earlier. The largest percentage increases in employment were in Delaware, 3.7 percent, and Virginia, 2.8 percent.

The Charleston area and the Eastern Panhandle counties have had the strongest economies in West Virginia recently. TLM Aerospace signed a final agreement to build a $30 million plant in Martinsburg in Berkeley County. Construction is expected this Spring. It will be located near the Sino Swearingen jet assembly plant, which is expected to begin manufacturing in November. At full capacity, the two plants could employ about 900 workers.

In Pittsburgh the 1-percent increase in employment over the 12 months ending in March 1998 exceeded the average annual rate of growth for the past several years. Both Mellon Bank and PNC Bank have announced plans for large operations centers in downtown Pittsburgh. Philadelphia continues to work to boost its share of the convention business with three former office buildings and a railroad station being converted to luxury hotels.

Builders and realtors throughout the Mid-Atlantic are optimistic about 1998 based on the strong activity in the first quarter of 1998. Single-family building permits for the first 3 months of 1998 totaled 21,939 units, up 4.5 percent compared with the same period in 1997. Virginia reported an 8-percent increase in single-family permits due to significant increases in the Northern Virginia and Tidewater areas.

In the Pittsburgh area, the new home market is targeted toward move-up and empty-nester buyers. Low interest rates and a mild Winter resulted in a 17-percent increase in home sales in the six-county Pittsburgh metropolitan area during the first quarter of 1998 compared with the same period in 1997. Allegheny County experienced a particularly strong February with sales up more than 26 percent from a year earlier. The average sales price of homes in the county was $106,458.

The sales market remained strong in the Philadelphia metropolitan area in 1997 with more than 25,000 homes sold. Slightly less than half of the sales were homes in the city of Philadelphia, where the average sales price in 1997 rose by about 10 percent in 5 out of 10 sections of the city.

Home values in the Washington, D.C. metropolitan area are expected to rise between 3 and 5 percent in 1998 according to some local sources. Sales of existing homes in 1997 were very good. New home sales, however, were somewhat flat, although they seemed to have recovered in the first quarter. Many analysts expect the market in 1998 to match or exceed 1997, and consumer confidence appeared very high through the first quarter of 1998. Single-family building permit activity in the Washington area for the first quarter of 1998 totaled 5,771 units, a 14-percent increase over the first quarter of 1997. Inventories and market conditions are fairly stable in most of the area's submarkets, but declining supplies and increased competition for homes are being seen in the close-in suburbs like Alexandria and Arlington.

Suburban counties in the Washington, D.C. area are seeking measures to curtail growth, primarily through increased development fees to cover the cost of schools, roads, parks, libraries, and fire stations. There are also proposals under discussion in Loudoun and Prince William Counties in Northern Virginia to slow future development.

Manufactured housing accounted for approximately 20,000 to 21,000 homes annually during the past 4 years in the Mid-Atlantic region. The manufactured housing shipment totals to Delaware and West Virginia provided significant additions to the homebuilding totals for those two States in 1997.

Mid-Atlantic rental markets were balanced through the first quarter of 1998. The Pittsburgh rental market continued to improve. The number of multifamily units issued building permits in 1997 was up 39 percent over 1996 levels as a result of numerous assisted-living facility developments and several large apartment complexes in Allegheny County. Three large market-rate rental complexes are under construction in Allegheny County, ranging in size from 268 units to 438 units.

Philadelphia's tax abatement program to encourage the conversion of older office buildings into luxury apartments received another boost when local developer AMGreenfield House, in partnership with an investment group formed by Franklin Capital Group, purchased a highrise building in Center City. The development, which is under construction, will have more than 150 one- and two-bedroom units with rents ranging from $890 to $3,800.

The Washington, D.C. area apartment market is balanced in most areas but is becoming more competitive. Recently completed projects are reporting vacancy rates of 2 percent and below. Strong demand is likely to continue, but with about 5,000 units under construction (75 percent of which are in Northern Virginia) and another 4,700 units in the planning stages, the market will begin to soften as competition increases. Demand for luxury apartments remains strong. Rents for two-bedroom apartments at premium developments in the Northern Virginia and Montgomery County suburbs are in the $1,500 to $1,700 range.

Spotlight on Baltimore, Maryland

In the 1980s, a booming Maryland economy helped Baltimore City halve its rate of population loss and maintain its employment base. The recession of the early 1990s, however, affected the Baltimore area worse than the national average, and the recovery started later and has been slower. Baltimore City lost nearly 11 percent of its population, from 736,000 persons in 1990 to 657,300 in 1997. The metropolitan area's other jurisdictions, especially the outlying suburbs, have experienced fairly significant population gains from 1990 to 1997. Population growth from 1990 through 1997 was 10 percent in Anne Arundel County. Howard County's population was up 22 percent; Carroll County's population grew by 19 percent; Harford was up 17 percent; and Queen Annes' population increased 15 percent.

The metropolitan area's economy has improved in the second half of this decade. The area's job growth is comparable to that of the Nation's, with services and goods transportation its strongest sectors. The unemployment rate in the first 2 months of 1998 has been only slightly above the rate for the State and the Nation. Total jobs in the Baltimore metropolitan area were up to 1.2 million as of February 1998.

Excess commercial vacancies have been absorbed; suburban commercial space is again being developed; and Baltimore City office space, which had its value collapse in the early 1990s, is seeing rising bids on some properties due to demand by REITs.

Baltimore City is benefiting from increased tourism. Spinoff from the Orioles' Camden Yards ballpark and the scheduled 1998 opening of the football stadium helped attract a Hard Rock Café, a Planet Hollywood, and the first ESPNZone. The city doubled the size of its convention center in 1996, resulting in proposals for three major hotels.

Health services are particularly important for Baltimore City and employ one in five city workers. Baltimore City has the State's two university hospitals, Johns Hopkins and University of Maryland, which, with other hospitals, account for two-thirds of the city's health services employment. Both hospitals have seen continued expansion in treatment and research facilities. Maryland's most significant growth in health-related employment has been in nursing and personal care facilities, an area where Federal Housing Administration (FHA) mortgage insurance has played a significant role.

Sales of existing homes in the Baltimore area were flat for most of 1997, with sales for the year down 1 percent from 1996. However, the market began to pick up in the fourth quarter of 1997. That strong finish appears to be carrying over to 1998. Existing home sales were up 23 percent in January, 30 percent in February, and 41 percent in March compared with the same months in 1997. The sales market in Baltimore City is also improving; resales for the first quarter of 1998 totaled 1,288 homes, up from 813 for the first quarter of 1997. Strong resales and move-up buyers are pushing the new home market. The Baltimore area's new home sales in January 1998 were up 12 percent from January 1997.

The rental housing market remains stable but relatively flat. Typical apartment properties are able to maintain sustaining occupancy and have generally been able to generate rent increases at the inflation level. New construction is predominately a niche market in desirable submarkets. The one exception is the market for assisted-living facilities, which in several prime suburban submarkets may be in danger from overbuilding. There are numerous proposals in the planning stage in Anne Arundel, Baltimore, Frederick and Howard Counties.