WEST MICHIGAN — Economic outlooks and survey results generally view West Michigan’s economy and employment growth as plodding along with the nation for the first half of 2013, then picking up during the latter months of the year.
The latest monthly reports from industrial purchasing managers in West Michigan found flat economic conditions at the end of 2012 after two months of showing promise in both the Kalamazoo and Grand Rapids areas.
“We’ve returned to an unimpressive growth pattern,” economist Brian Long, director of supply chain management research at Grand Valley State University’s Seidman College of Business, wrote in his report on the Grand Rapids area.
Long expects the region’s economy will continue in a slow-growth mode during the early months of 2013 along with the nation’s economy. Conditions could improve as businesses adapt to the new taxes imposed with the federal Affordable Care Act and as the national economy does better later in the year.
“Bottom line: The best we can hope for in early 2013 is very slow growth. It is most likely that we will see business conditions remain dead flat, or even decline somewhat. If the business community is able to decide how to deal with the Obamacare mandates and taxes by mid-year, we should see some additional slow growth for the last half of 2013,” Long wrote.
December indexes for sales, production, purchases and employment all declined from November in the Grand Rapids area. The sales and production indexes declined in the Kalamazoo area for December but remained positive, and the employment and purchasing indexes inched upward.
Across a broader region, economists at PNC Bank predict that job growth will continue in 2013, albeit at a slightly slower rate than last year. After outpacing the nation’s economic performance, the region’s overall job growth will begin to slightly lag the rest of the U.S., PNC economist Kurt Rankin said.
“It won’t be an outstanding year. (West Michigan’s performance) will be more like the U.S., unfortunately with slow growth, but it will accelerate,” Rankin said.
PNC forecasts job growth of 1.1 percent in 2013 for a region that covers the southwestern quarter of the Lower Peninsula, including Grand Rapids, Kalamazoo, Battle Creek and Lansing. That compares to estimated growth of 1.3 percent in 2012 and 1.2 percent in 2011.
PNC predicts 1.4 percent employment growth nationally.
During the year, as the auto industry drives job growth in manufacturing and the service sector accelerates, the region’s unemployment rate will continue to inch downward from a projected 7.0 percent at the end of 2012 to 6.5 percent by December of 2013, PNC economists predict. Unemployment at the end of 2011 stood at 8.4 percent.
Southwest Michigan’s recovery from the recession “has been all one could ask for through year-end 2012,” PNC economists wrote in a regional outlook. “While Southwest Michigan still has several years of growth ahead of it in order to recapture pre-recession employment, the trends toward that goal will be broad based and are likely to be uninterrupted.”
Nationally, PNC projects unemployment to dip slowly during the full year to 7.7 percent, compared to a projected 8.1 percent at the end of 2012.
Compared to the national economy, Southwest Michigan has “several advantages that provide it with upside potential concerning these growth prospects,” the PNC outlook states. “Its broad availability of skilled labor at competitive wages, along with favorably low industrial and office rents, will lend support to the long-term development process of attracting new employers to the market area.”
Housing in the bank’s Southwest Michigan market has more recovery to do than employment, although home prices “appear to be set for slight, but steady positive growth beginning in early 2013,” PNC economists wrote.
PNC projects housing prices in the region to grow 2.6 percent in 2013, versus 0.5 percent in 2012 and a decline of 3.3 percent in 2011.
The recent employment outlook from the W.E. Upjohn Institute for Employment Research predicted job growth for 2013 that’s driven by the goods-producing sector with gains as well as by the service-producing sector.
Senior regional analyst George Erickcek forecasts 1.2 percent overall job growth in 2013 and 1.6 percent growth in 2014 for the Grand Rapids area. The numbers are tempered by government employment, which he projects to lose ground in 2013 and stagnate in the following year.
Since the recession ended, the region’s employers have created 5,000 net new jobs after losing about 32,000, Erickcek said. Manufacturers contributed about 40 percent of that net total, adding around 2,000 jobs, according to data Erickcek tracks.
But he cautioned that number fails to tell the whole story because the numbers for new people in manufacturing who are working for placement firms or temporary worker agencies is counted under the professional and technical classification.
“In manufacturing, we’re doing just as good as the nation,” Erickcek said. “Not surprisingly, if we look at the most current data we have … transportation, including auto suppliers, really is the engine of growth in the Grand Rapids area. So, again we’re hearing the story about the importance of auto and the importance of manufacturing in driving the economy of West Michigan and of Grand Rapids.”
Another view of the economy comes via a survey by The Employer’s Association in Grand Rapids, where just 31 percent of respondents indicated they expect better economic growth nationally in 2013 than in 2012. Four in 10 respondents plan to hire new employees this year, while 44 percent plan to at least maintain present staffing levels.
One hot area for new jobs is information technology. In the latest semi-annual outlook from Paragon Recruiting in Holland, nearly 60 percent of respondents said they planned to hire additional I.T. staff over the next six months. Just 1 percent planned to trim staff.
“Tech hiring remains very strong in West Michigan,” said Beth DeWilde, chief recruiting officer at Paragon.
The strong I.T. hiring trend is across all sectors surveyed: manufacturing, consulting, professional service, education and retail/wholesale, according to Paragon’s survey results.