Michigan’s economy should remain in good shape for the foreseeable future, according to results of a semi-annual survey PNC Bank conducts with small and medium-sized business owners.
Among respondents, 56 percent said they expect their company’s sales to increase in the next six months and nearly one-quarter expect to hire more full-time employees.
The results indicate that business owners in Michigan “remain highly optimistic about the prospects for their own businesses and the U.S. economy, although optimism has moderated from the historic highs of spring 2017, in the immediate aftermath of the 2016 elections,” said PNC economist Kurt Rankin.
“Michigan’s economy will continue to recover for the remainder of 2017. Strong job growth spanning a broad base of industries will allow the region to continue its upward climb,” Rankin said. “In the state’s economy and the local market economies, Detroit and especially Grand Rapids, the unemployment rates are low, wages are growing, and economic activity is strong and looks to continue to remain so.”
According to the most recent data from the Michigan Bureau of Labor Market Information and Strategic Initiatives, unemployment in August was below 5 percent in Barry, Ionia, Kalamazoo and Newaygo counties, and below 4 percent in Allegan, Kent and Ottawa counties.
By metropolitan area, Grand Rapids-Wyoming had the lowest unemployment rate in the state at 3.8 percent. Among other metros in West Michigan, the unemployment rate was 4.6 percent in Kalamazoo-Portage, 5 percent in Niles-Benton Harbor, 5.1 percent in Battle Creek, and 5.8 percent in Muskegon, according to the state.
In the PNC survey, business owners also showed confidence in their local and the U.S. economies: 28 percent said they were optimistic about the local economy, versus 36 percent in the spring and 20 percent a year ago.
On the national economy, 30 percent were optimistic, which compares with 38 percent in the spring and 14 percent a year ago prior to the 2016 presidential election.
The changes from the spring are well within the usual seasonal fluctuations of survey results between the fall and spring since business owners tend to be more optimistic early in the year, Rankin said. Still, the fall 2017 results show “not much of a pullback” from six months ago, he said.
Rankin notes that a low percentage of business owners are pessimistic. Among respondents, just 11 percent were pessimistic about both the U.S. and their local economies.
“Looking nationally, it’s really difficult to point somewhere and say, ‘this is a concern (or) this is where the economy’s likely to trip up.’ Slow growth has the advantage of allowing slow growth to continue,” Rankin said.
Results of the PNC Bank survey are similar to a recent outlook from Business Leaders for Michigan.
Among the CEOs and university presidents that make up the group, 58 percent were optimistic that Michigan’s economy will continue to grow in the next six months and 44 percent view the U.S. economy the same way.
Taking a longer perspective over the next 18 months, 45 percent of business leaders expect Michigan’s economy to grow and 39 percent expect growth for the U.S. economy.
Half of Business Leaders for Michigan’s members plan to increase capital investment in the state during the next six months, and 63 percent expect to increase staffing levels.
Those results differ from the findings of a survey from the Livonia-based American Society of Employers released last month. In its second quarter economic and employment survey, the ASE noted that Michigan employers had become less optimistic about the future business outlook when compared to earlier in the year.
ASE reported that employers who expected improving business conditions (26 percent) hit its second lowest point since 2009. Meanwhile, execs expecting conditions to worsen (17 percent) hit a new high since 2009.
The survey skewed heavily to companies with fewer than 500 employees (85 percent) and those in manufacturing (62 percent).
A new outlook from the University of Michigan said the state is now eight years into an economic recovery since bottoming out in the summer of 2009. Since then, Michigan has averaged employment growth of 1.7 percent annually — outpacing the 1.5 percent for the nation — and averaged annual net job growth of 70,200.
This year, however, “the Michigan economy has pumped its brakes,” U-M economists wrote in an economic outlook issued last week that noted a “marked slowdown” in job growth through three quarters of 2017.
U-M economists see job growth “nudging up over the next two years, but its tempo remains muted” and should average 0.8 percent during the first half of 2018. They project job growth of 1.1 percent in the latter half of next year followed by expansion of 1.3 percent in 2019.
That would extend Michigan’s economic recovery to 10 years and translates to a gain of 41,800 jobs in 2018 and 55,400 in 2019.