Economic outlooks project further job growth in Michigan through 2016 and into 2017, albeit at a slower rate than past two years.
The job growth should drive lower unemployment rates and income gains as the labor market tightens across the state.
Across a region of central and western Michigan that includes Grand Rapids, Kalamazoo, Battle Creek and Lansing, PNC Bank projects unemployment to decline to 3.5 percent for 2016 and to 3.4 percent in 2017. Unemployment in the region – which PNC labels as “Greater Michigan” – stood at 4.0 percent for 2015.
“Greater Michigan’s recovery is one of the most impressive across the Midwest region’s market areas. Job growth is strong across a range of industries, and the unemployment rate has declined dramatically — from above 14 percent to under 4 percent to close out 2015,” states a regional economic outlook issued this week by PNC Bank. “Greater Michigan’s sustained recovery will remain supported by national GDP growth, which is forecasted to remain moderate over the coming year, providing external demand for the market area’s manufactured goods.”
PNC Bank projects regional employment growth of 2.8 percent in 2016, versus 2.2 percent in 2015. That compares with national employment growth of 2.1 percent for 2015 and a projected 1.7 percent for 2016.
The employment gains and a decline in the unemployment rate should create “plenty of momentum for wage growth over the coming year” across the market. Although median household income regionally sits below state and national averages, except for the Grand Rapids area, “growth in wages has been exceptional thanks to a 4 percent unemployment rate that has competition for labor resources bidding up pay rates,” according to PNC Bank.
“Greater Michigan’s relatively low cost of living provides added benefit to the strong wage gains enjoyed by the market area of late. And the new incomes that have accompanied strong hiring trends will go far toward keeping Greater Michigan’s economic expansion on track,” the economic outlook states. “Current labor market attractiveness versus many neighboring Midwest region economies will allow Greater Michigan to maintain its advantage in attracting new residents over the near-term horizon.”
Across the entire state, an updated outlook from the University of Michigan projects personal income gains of 3.9 percent in 2016 and 4.0 percent in 2017, versus 4.3 percent in 2015.
Michigan is now in its seventh year of job growth, according to U of M economists. The state’s economy has created 445,000 jobs since the low point in the summer of 2009, averaging 71,200 a year.
Michigan started 2016 with an estimated 3.4 percent growth in jobs for the first quarter, according to the U of M’s Research Seminar in Quantitative Economics.
“We see job growth then pulling back from that unsustainably vigorous pace to average 1.2 percent for the rest of 2016 before nudging up to settle in at moderate growth of 1.3 percent during 2017,” states an updated economic briefing by U of M economists.
That equates to the gain of 73,200 jobs across the state for 2016, “before tempering to 56,000 during 2017.”
In a semi-annual survey by PNC Bank, 45 percent of small and mid-sized business owners said they expected higher sales in the next six months and 42 percent expected no change. Another 8 percent expected lower sales.
Forty-six percent of business owners anticipated higher profits, 41 percent projected earnings to stay the same, and 11 percent expected lower profits.
The expectations “are stable for sales and profits despite greater pessimism about the economy given the stock market lows and presidential election rhetoric since the start of the year,” PNC economists wrote on a briefing on the spring survey results.
Nearly 20 percent of business owners responding to the PNC survey planned to add employees in the next six months, a higher rate than last fall and a year ago, and 21 percent expected to increase pay, versus 33 percent last fall and 26 percent last spring.
Thirty-five percent said they’re having a harder time finding qualified employees compared to six to 12 months ago.