Area officials are applauding the results of a newly released survey that shows a dramatic improvement in manufacturing business climates in Maryland and Virginia.

In a survey that each year prompts a storm of fuming, hand-wringing or boasting, Grant Thornton, a big Chicago accounting and consulting firm, ranked Maryland 20th in terms of its business climate, up from 32nd last year.

Virginia's manufacturing climate was rated the fourth most favorable, eight notches better than last year, according to the eighth annual survey of the 48 contiguous states.

The Grant Thornton index is one of several surveys measuring states' business climates, rankings that usually cause controversy. States that are ranked high boast of the survey to potential businesses, while states that score low often assail the indices as unreliable.

"Whether it's true or not, it's great propaganda," said Jack Herrity, chairman of the Board of Supervisors in Fairfax County, where a local Grant Thornton office announced Virginia's results last week. "Everybody says, 'That's great.' It's a good deal for the state and a good deal for the county."

In the Grant Thornton survey, the leading business climate rating, the state rankings are based on a series of factors considered by the manufacturers to be keys to business success. Conditions that supposedly affect business success were selected by 41 state associations representing manufacturers.

The manufacturing associations assessed the importance of 21 factors, including wages, unionization and energy costs, in addition to new factors this year dealing with quality of life -- education, health care, cost of living and transportation. Grant Thornton decided each state's "factor value" and assigned rankings to the states.

Listed as the top-ranked states are North Dakota, Nebraska and South Dakota.

Fourth-ranked Virginia was cited as having the nation's best state business incentive programs, such as employe training programs and changes in unemployment rates, according to the survey. Virginia was rated No. 2 in state-regulated employment costs.

Maryland, meanwhile, was ranked as having the 20th most favorable manufacturing climate, after sinking to 32nd place last year. In 1985 Maryland was ranked 30th. The survey reported that Maryland now ranks third in the country in the growth of state expenditures, the survey reported.

The District of Columbia is not ranked in the Grant Thornton index.

Another consulting group, the Corporation for Enterprise Development (CFED), recently accused the Grant Thornton index of being flawed and encouraging bad public policy.

CFED asserts that Grant Thornton's definition of a traditional business climate is out of date, based on an economy where cheap, low-skilled labor are key.

This year, the nonprofit Washington economic development research and consulting group published its own report card on states. It found Maryland's business climate to be better than Virginia's.

Remarking on the Grant Thornton index headed by North Dakota, CFED's president, Robert Friedman, said, "Look at their list and ask if that makes sense.

"They don't really come to mind as big manufacturing states . . . .{Grant Thornton} is still using the wrong set of measures. They're not measuring, by and large, where the action is in this economy."

Still, Maryland officials are heartened by their move up the Grant Thornton ranks.

"While we are pleased with this latest ranking, we won't be satisfied until we are No. 1," Maryland Gov. William Donald Schaefer said last week.