Executives answering the latest survey by Business Leaders for Michigan expect both the state and U.S. economies to grow at a slower pace through 2017.
Seventy-eight percent of respondents to the quarterly survey said they expect Michigan’s economy to remain the same over the next six months, and 72 percent felt that way about the U.S. economy. Just 15 percent expect moderate growth for the state and 8 percent see it for the national economy.
Looking ahead for 18 months, 54 percent of survey respondents expect the U.S. economy to remain about the same, one-third think it will worsen and 13 percent see it improving.
Nearly one-quarter expect Michigan’s economy to improve in the next 18 months, 26 percent forecast a decline, and half of respondents expect it to remain flat.
“Michigan’s business leaders believe the economy will continue to improve, albeit more modestly, into the new year,” said Business Leaders for Michigan President and CEO Doug Rothwell. “But the longer-term view has gotten a bit more pessimistic over the course of 2016. Most of this is being driven by factors outside of Michigan — slower growth in some overseas economies, growing domestic regulatory pressures and uncertainty surrounding this year’s election. Despite these factors, however, many of our largest job providers continue to hire and expand in Michigan.”
Results from the survey also show that nearly half of Business Leaders for Michigan’s members project that their companies will add jobs and plan to make capital investments over the next six months.
Across the state, economic activity dipped slightly in July, according to Comerica Inc.’s latest economic index for Michigan. The index, which is based on eight economic measures, registered 129.4 for July, down 0.4 percentage points from the prior month, when it increased.
“We have seen an overall upward trend in the index, with a back-and-forth monthly pattern since late 2015. Job growth in Michigan is looking choppy. State payroll employment was up by 2.4 percent in July over the previous 12 months, but the month-to-month pattern has been jarred by net job losses in May and August,” Comerica chief economist Robert Dye wrote in a briefing on the July index.
“Over time, we expect to see an overall decline in auto production from Michigan,” Dye said. “Manufacturing employment in Michigan has levelled out this year. We look for growth in the service sector to sustain the state’s economic expansion through the remainder of this year.”
Nationally, the University of Michigan’s updated outlook for the U.S. predicts real GDP growth of 1.8 percent for the fourth quarter and 1.5 percent expansion for all of 2016. That will be followed by growth rates of 2.4 percent in 2017 and 2.1 percent in 2018.
U-M economists expect light vehicle production to end 2016 at 17.2 million units, which compares to 17.4 million in 2015. Light vehicle production will then dip to 17.1 million units in 2017 and 17.0 million in 2018, according to the U-M outlook issued in mid-September.