Muncie Forecast 2017

The Muncie-area economy showed several positive changes over the past year. The unemployment rate decreased over the course of the year, even as the labor force reached pre-recession levels. Nonfarm employment increased, as did the number of residential building permits. Residential sales were strong, and shortages of inventory in the $125,000 to $250,000 range are likely to spur new construction in the coming year. Corresponding to improvement in Muncie’s employment situation, the number and amount of food stamps issued decreased substantially during 2016.

Media reports substantiate the improving economic situation. There is increased activity in the downtown Muncie area. With the opening of the new Marriot Courtyard downtown, convention business rose during 2016. Media reports show an increasing number of conventions linked to the new downtown hotel, with at least a dozen new conventions and events scheduled through the summer of 2017.¹

Other downtown news included funding in the form of a $1 million loan from the city to jump-start construction on a maker hub (renamed GearBox and then Madjax Maker Force) on the east side of downtown in the former Cintas/Midwest Towel facility.² The maker hub is meant to be a space for art, cultural activities and professional services to be accessible in one space.

In the retail sector, the opening of a new supermarket, Fresh Thyme Farmers Market, was announced and is expected to create 80 jobs in the coming year.³ On the downside, two sports stores (MC Sports and Dunham’s Sports) announced they are closing. Increased competition from Dick’s Sporting Goods (which opened in 2014) was cited as one reason for the stores’ closing.⁴ Also, the Marsh warehouse in Yorktown closing in September affected about 72 workers.⁵

In manufacturing, Brevini Wind, which opened in 2010 to much fanfare, ceased operation late summer—affecting about 20 employees. The Brevini USA subsidiary of the group’s power transmission unit will continue operation in the same industrial park, employing more than 40 workers.⁶ Ardagh, an international glass and metal company, announced that it would move its headquarters from Muncie to Fishers, affecting about 200 office workers.⁷

This article includes the most current data available on various measures of economic activity from public sources for the Muncie MSA (Delaware County) to analyze changes over the past year. A summary of the labor market forecast for the Muncie area is included in the conclusion.

Labor markets

The unemployment rate fell over the year, decreasing from 5.9 percent in January to 4.9 percent in September. This rate is slightly higher than one year ago (4.7 percent in September 2015), as people entered the labor force in greater numbers. Delaware County’s unemployment rate remains higher than Indiana’s rate of 4.2 percent (not seasonally adjusted) during September 2016.

The labor force in the Muncie MSA grew by 948 (1.7 percent) since September 2015, while the number of unemployed workers grew by 156 (6.1 percent) over the year (see Table 1). The labor force is on par with the pre-recession peak of approximately 55,750, while employment has surpassed the pre-recession peak of approximately 52,500 jobs.

We use the monthly average of employment for the first three quarters of the year to examine changes in industry employment in the Muncie MSA. Nonfarm employment increased in 2016, adding over 650 jobs (1.3 percent) compared to the previous year (see Table 2). Nonfarm employment is still more than 1,000 jobs lower than pre-recession levels, but has increased over the past couple of years. Manufacturing jobs increased by over 200 jobs during 2016, and private service sector employment increased by more than 600. Government employment decreased, driven primarily by losses in the education sector, as did employment in trade, tranportation and utilities.

Average weekly wages in Delaware County in the first quarter of 2016 decreased from $725 to $693 (-4.4 percent) after five years of continuous growth (see Table 3). However, 2016 is still the third-highest year for average weekly wages for the metro area since 2001, with 2014 and 2015 being the only higher years ($705 and $725, respectively). However, wages in the Muncie MSA continue to be consistently lower than the state average, which only decreased -0.5 percent this past year (from $857 to $853).

Slightly less than half of the industry sectors (eight out of 18) experienced wage gains in 2016, ranging from 0.4 percent to 9.6 percent. Only the information sector (9.6 percent) surpassed 5 percent growth. Meanwhile, 10 sectors saw average weekly wages decline in 2016, ranging from -0.4 percent to -10.3 percent. Five of these sectors saw declines of 5 percent or more: management of companies and enterprises (-10.3 percent), finance and insurance (-8.5 percent), administration, support, waste management and remediation services (-7.7 percent), transportation and warehousing (-5.7 percent), and wholesale trade (-5.6 percent). The decrease in average weekly wages is likely due to businesses hiring workers with less experience as the job market has tightened.

Housing

Building permit activity remains well below pre-recession levels, but increased substantially during 2016. There were 16 new residential building permits issued during 2016—the highest since 2011, which had 33 new permits (see Table 4). Single-family construction made up the majority of those new permits. We expect building activity in the single-family submarket to increase over the next year.

Consistent with national trends, residential sales increased and the average days on the market decreased (see Table 5). Average and median sale prices decreased slightly during 2016, likely due to low listing inventory in the $125,000 to $250,000 price range driving sales to lower price categories.⁸

Social safety net

Amidst increases in employment in the metro area, the dollar amount of food stamps issued decreased for the third year in a row after five consecutive years of increase (see Table 6). Households in Delaware County received approximately $1.97 million per month in food stamps in 2016 (based on a January through August average). This is a 17.2 percent decrease since 2015 and the smallest amount issued since 2009. The number of food stamp recipients decreased to 16,204 (-13.3 percent), which is the lowest since 2009. Meanwhile, the number of households receiving food stamps decreased to 7,828 (-15.7 percent), which is the lowest since 2010. The dark spot is that average wages are not increasing in most industry sectors.

Outlook

In the coming year, we expect a small gain in employment (0.7 percent growth) and income growth (3.7 percent increase).⁹ We also expect the unemployment rate to remain in the 5 percent range as people continue to enter the labor force looking for jobs.