Employment expectations for Indiana metros in 2018
Economists from around the state shared their forecasts for Indiana’s metropolitan statistical areas (MSAs) during the Indiana Business Outlook Panel tour and in the online edition of the Indiana Business Review. One common theme throughout the state was the impact of “full employment” on businesses hoping to expand. Here are some highlights describing how our panel of experts predict local employment will change in 2018.
Dr. Terry Truitt, Anderson University
After long periods of stagnant and declining employment, the number of employed in Madison County has seen healthy increases for the last five years. The number of employed increased from 52,202 in 2012 to 57,842 as of September 2017. As of September, Madison County improved the number of jobs by 1.8 percent over the 12-month period. The number of employed in Madison County is expected to have a modest increase of about 1.5 percent in 2018.
Dr. Jerry Conover, Indiana University
Since 2000, there have been notable differences in employment across industries. The area’s largest sector by employment—manufacturing—has shrunk by more than 1,000 jobs since 2000, while construction and retailing each shed more than 600 jobs. On the other hand, several sectors added jobs, including two of the area’s largest sectors: accommodation and food services (+1,970) and health and social services (+1,568). And a relatively small but growing sector, management of companies and enterprises, has nearly doubled in size since 2000, with most of the expansion occurring in just the last few years. For 2018, the IBRC’s Center for Econometric Model Research forecasts Bloomington MSA employment growth of about 2,200 jobs—roughly a 2 percent gain. This is a faster pace of growth than is forecast for all but two of Indiana’s 14 metro areas.
Dr. Ryan Brewer, Indiana University–Purdue University Columbus
Columbus has been creating job growth over the past eight years with remarkable efficiency. During this period, Columbus has produced about 13,100 jobs. Job growth over the prior 12 months was 1,100, or 2.1 percent. Slowing growth in labor force participation combined with an ultra-low 2.7 percent unemployment rate implies that future job growth in Columbus without further population growth will be a challenge. For 2018, continued growth is slightly overshadowed by suspicions that the economic expansion seen in Columbus over the last eight years may be facing headwinds generally arising from a tremendously tight local labor market.
Elkhart-Goshen and South Bend-Mishawaka
Dr. Hong Zhuang, Indiana University South Bend
The Elkhart-Goshen MSA added 5,057 workers between August 2016 and August 2017, while employment in the South Bend-Mishawaka MSA declined slightly by 347. The 4.8 percent increase in Elkhart-Goshen's employment was far above the national average growth rate of employment of 1.2 percent and the state average rate of 1.0 percent; however, the South Bend-Mishawaka MSA experienced a 0.2 percent job loss in 2017. The labor force in South Bend-Mishawaka is expected to expand in 2018 accompanied by job growth. However, the labor force has been tight in Elkhart-Goshen and that might constrain further employment growth in this area.
Dr. Mohammed Khayum, University of Southern Indiana
The unemployment rate in the Evansville metro fell from 4.5 percent in January 2017, to 3.3 percent in September 2017. Job gains occurred primarily in professional and business services, construction, and health care. Meanwhile, sectors experiencing jobs losses included retail trade, as well as transportation, warehousing and utilities. A widening gap between the Evansville economy and the U.S. economy with regard to income growth over the past three decades highlights the importance of achieving higher rates of output and employment growth.
Rachel Blakeman, Indiana University–Purdue University Fort Wayne
Although the final numbers aren’t in yet for 2017, the area can expect to end the year at full employment. Employment peaked in June and July, with both months at just above 210,100. Recent economic trends have been favorable to Fort Wayne’s manufacturing-heavy economy. The overall health of the American economy is solid. The question becomes: How much longer will this continue? We are in an extended stretch of American economic growth. The slight but persistent uptick in unemployment in the second and third quarters, especially with a corresponding increase in first-time unemployment claims, creates pause. Nevertheless, the low unemployment rate indicates the market may be able to absorb these newly unemployed workers, assuming their skills match open positions. One consideration is how to engage additional people in the labor force, especially in light of baby boomer retirements and a growing segment of prime-working-age men who are not working or seeking employment.
Dr. Micah Pollak, Indiana University Northwest
While total employment in Northwest Indiana has remained essentially the same, its composition has changed significantly. Since the third quarter of 2012, Northwest Indiana has lost 6,200 jobs in goods-producing sectors, such as manufacturing and construction, which are generally high-paying (with an average income of $80,000 per year) and with good benefits. This decline was offset, at least in numbers, by the addition of 5,600 jobs in service-providing sectors, which are generally lower-paying (with an average income of $39,000 per year) and with limited benefits. In 2018, Northwest Indiana employment is predicted to expand by 0.7 percent with the creation of approximately 1,800 jobs, almost all of which will be in the service sector.
Dr. Kyle Anderson, Indiana University
The current civilian workforce stands at 1.06 million workers (as of September 2017), and of those, only 36,000 are unemployed. This represents an extremely tight labor market that will create a challenge for businesses looking to grow. However, it is a good sign for the local economy, as consumer spending and housing should benefit from full employment. The local economy will continue to add jobs in 2018. In 2017, the workforce grew by 2.0 percent, a trend that will need to continue in order to fuel employment growth. Overall, the Indianapolis economy continues to be moderately strong. The region is at full employment and continued job growth will ensure that it stays there.
Dr. Alan G. Krabbenhoft, Indiana University Kokomo
The unemployment rate for Howard County fell slightly during 2017. In 2018, employment levels will continue to be relatively stable (i.e., at or very near the levels seen throughout 2017). Economists refer to such low levels of unemployment as representing full employment. While the rate might dip below these levels in the short term, as it did during spring 2017, those levels are not sustainable.
Tanya Hall, Purdue University
In 2017, nearly all industries in the region experienced both employment and wage increases, as well as low unemployment rates. A year-over-year comparison between August 2016 and 2017 shows that employment increased by 1,400 workers, and 260 exited the unemployment rolls. This labor market growth is not spectacular and may reflect a tight job market with scarcity of employees to fill existing job openings. The uptick in employment was small (1.3 percent), and signals are pointing to the MSA operating at full employment. In 2018, it is projected the Lafayette MSA may gain an additional 2,600 workers, distributed throughout the various industries. At the time of this writing, there is no reason to expect contractions in any particular industry.
Dr. Uric Dufrene, Indiana University Southeast
The September year-to-date change in payroll employment of 6,000 is the lowest since 2011. Labor force growth in Southern Indiana has also declined from recent years and may not be sufficient to support the anticipated job growth associated with assets such as the River Ridge Commerce Center. With record low unemployment rates, the region is seeing a smaller labor pool available to fill vacant positions. Stronger manufacturing growth at the national level has not produced growth at the local level, and stronger national consumer confidence and retail sales have not contributed to key regional sectors, such as transportation and warehousing. The real question is whether the region has now hit a roadblock to potential job growth due to the lack of robust labor force growth. That remains to be seen, but the region is now facing significant headwinds to overall job growth. Creative strategies to attract and retain residents will be critical. While the overall economic outlook is favorable, the local impact of this positive economic outlook will rest on the region’s ability to grow its labor force.
Dr. Dagney Faulk and Kera Fenimore, Ball State University
The Muncie-area economy continued to grow slowly during 2017, with nonfarm employment increasing by less than 1 percent. Nonfarm employment is still lower than pre-recession levels by more than 1,000 jobs, but overall has continued to increase each year since 2014. Notably, the only sector to experience a decrease in employment in 2017 was the trade, transportation and utilities sector, down 89 jobs (1.0 percent) since 2016. The IBRC Center for Econometric Model Research’s forecast predicts that Muncie MSA employment will grow by half a percentage point during 2018.
Dr. Lee Zhong, Indiana University East
The regional labor market showed mixed signals in 2017. The average size of the labor force slid 2 percent in Wayne County for the first eight months of 2017 and fell 0.8 percent for the region as a whole. Unemployment rates reached historically low levels in April 2017: 3 percent in Wayne County and 3.1 percent for the region. As of the first quarter of 2017, manufacturing showed particularly strong growth, outshining other industries. In 2018, the unemployment rate is expected to maintain at low levels around 4 percent. Both job and wage increases are likely to be moderate in general, but some sectors could experience stronger growth than others, particularly manufacturing. The likely uptick on employment and wages should benefit the local housing market.
Dr. Robert Guell, Indiana State University, and Kevin Christ, Rose-Hulman Institute of Technology
On the jobs front, Terre Haute experienced an abnormally good spring in 2017, with the unemployment rate dropping rapidly from February to May. Unlike some other recent declines in the area’s unemployment rate, which sometimes were attributable to people leaving the labor force, this spring’s improvement was unambiguously due to a strong uptick in employment. This coincided with the ramping up of construction projects around town, highlighting the importance of the construction boom to the overall health of the local economy. The local labor market seems tighter than it has been in years. While we do not foresee any significant change in the region’s jobs numbers or unemployment rate during 2018, this labor market tightness highlights the ongoing challenge of workforce preparation. A greater challenge, and one of the questions that regional leaders should address is, "Why has Terre Haute region’s labor force essentially not changed since 1990?" To go for so long without measurable growth in the labor force, as Terre Haute has done, translates into economic stagnation.
Visit www.ibrc.indiana.edu/ibr to read the in-depth metro analyses, as well as projections for the nation, state, financial markets and more.