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The IBR is a publication of the Indiana Business Research Center at IU's Kelley School of Business

Muncie Forecast 2011

Director of Research, Center for Business and Economic Research, Ball State University

Graduate Assistant, Center for Business and Economic Research, Ball State University

Year two after the Borg Warner plant (the last of the large automobile-related factories) shuttered its doors, the Muncie metro area finds itself making progress redefining itself as a fledgling hub in the alternative energy industry. The city of Muncie went through a community planning process this year, and the resulting Muncie Action Plan identifies goals and actions to improve Muncie. There have been several job announcements over the past few months. And while local governments are still struggling with the ramifications of property tax caps, there seems to be a renewed sense of optimism for the coming year.

This article includes the most current data available on various measures of economic activity from public sources for the Muncie metropolitan area (Delaware County). The goal is 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 (not seasonally adjusted) for September 2010 is the lowest Delaware County has seen in the past year. However, the September 2010 rate (10.1 percent) is higher than the September 2009 rate of 9.7 percent and local unemployment has consistently been higher than that of the state. The good news is that the labor force has been slowly increasing since June and the number of unemployed workers has been decreasing at a faster rate, leading to the decrease in the unemployment rate (see Table 1). This is ideal and signifies that frustrated job seekers are coming back into the labor force; however, this value may mask underemployment where workers are working fewer hours than they would like (part-time instead of full-time) or have taken jobs that do not fully utilize their skills.

Table 1: Labor Force and Unemployment for Delaware County, September 2009 to September 2010

Year Month Labor Force Unemployed Unemployment Rate
2009 September 54,449 5,283 9.7
October 54,386 5,538 10.2
November 53,621 5,430 10.1
December 53,478 5,592 10.5
Annual 54,619 5,724 10.5
2010 January 52,498 6,160 11.7
February 53,266 6,234 11.7
March 53,359 6,235 11.7
April 54,354 5,847 10.8
May 54,687 5,866 10.7
June 53,035 6,356 12.0
July 53,085 6,155 11.6
August 53,401 5,896 11.0
September* 54,346 5,514 10.1

*September 2010 data are preliminary.
Note: Data are not seasonally adjusted.
Source: Bureau of Labor Statistics

Table 2 shows that nonfarm employment decreased by about 330 jobs (-0.7 percent) in 2010, which is a much smaller decrease compared to the previous year’s decrease (-2,800 jobs) in Delaware County. Of the job losses for 2010, manufacturing took the greatest hit with 322 lost jobs (-8.5 percent) followed by other services losing more than 100 jobs (-6.5 percent) and educational and health services losing 100 jobs (-1 percent). There was a fairly large increase of 233 employees in the government sector for the county (1.9 percent) reflecting the census activity, in part.

Table 2: Muncie MSA Employment, Year-to-Date 2009 to 2010

Industry 2010* Change since 2009 Percent Change 2009-2010
Total Nonfarm 48,978 -333 -0.7%
Total Private 36,667 -567 -1.5
Goods-Producing 4,878 -478 -8.9
Manufacturing 3,467 -322 -8.5
Service-Providing 44,100 144 0.3
Trade, Transportation and Utilities 8,178 -11 -0.1
Information 400 0 0.0
Educational and Health Services 9,767 -100 -1.0
Leisure and Hospitality 4,967 -44 -0.9
Financial Activities 2,589 -11 -0.4
Other Services 1,589 -111 -6.5
Government 12,311 233 1.9

*January through September average. September data are preliminary.
Source: Bureau of Labor Statistics

Average weekly wages as a whole for Delaware County remained steady at about $611 per week from 2009 to 2010 (see Table 3). Some sectors were hit much harder than others, including utilities (-24.3 percent), wholesale trade (-13.3 percent) and construction (-12.2 percent). In contrast, many sectors experienced wage increases over the past year, including manufacturing (9 percent), public administration (9.2 percent), arts, entertainment, and recreation (9.8 percent), and management of companies and enterprises (18.7 percent). While no net change in the average wage rate across all sectors can be viewed as a positive, it represents a decrease in buying power when the inflation rate of 2.4 percent is considered.

Table 3: Average Weekly Wages in Muncie MSA, 2009:1 to 2010:1

Industry 2010:1 Change since 2009:1 Percent Change
Total $611 $0 0.0%
Utilities 1,116 -358 -24.3
Wholesale Trade 805 -123 -13.3
Construction 647 -90 -12.2
Administrative and Support and Waste Management and Remediation Services 416 -20 -4.6
Real Estate and Rental and Leasing 570 -27 -4.5
Transportation and Warehousing 717 -27 -3.6
Other Services (Except Public Administration) 408 -13 -3.1
Retail Trade 379 -8 -2.1
Health Care and Social Services 618 -9 -1.4
Professional, Scientific and Technical Services 719 -9 -1.2
Educational Services 729 -7 -1.0
Finance and Insurance 721 -6 -0.8
Information 619 37 6.4
Manufacturing 893 74 9.0
Public Administration 712 60 9.2
Arts, Entertainment and Recreation 290 26 9.8
Management of Companies and Enterprises 2,034 321 18.7

Source: Bureau of Labor Statistics

Housing

New housing construction remains sluggish especially when compared to the early years of the decade. Total building permits increased marginally in 2010 from 26 to 30 permits—much lower than pre-recession levels (see Figure 1).

Figure 1: Delaware County Residential Building Permits, Year-to-Date 2000 to 2010

Figure 1: Delaware County Residential Building Permits, Year-to-Date 2000 to 2010

Note: Each year is based on January through September totals.
Source: IBRC, using U.S. Census Bureau data

Residential real estate market activity decreased relative to the same period last year. The number of units sold decreased from 733 to 714 units with an average sale price of $85,084, about $5,500 lower than the same period last year (see Table 4). The sales volume is substantially lower than the 2006 peak of 1,086 units sold. This drop in activity is contrasted by the decreased number of days on the market. The drop in sales price likely represents residents eager to sell their homes either with prospects of moving to newer homes or migrating to other areas.

Table 4: Residential Real Estate Sales in Delaware County, Year-to-Date 2004 to 2010

2004 2005 2006 2007 2008 2009 2010
Units Sold 1,063 966 1,086 984 715 733 714
Average Days on Market 115 119 131 128 145 155 130
Average Sale Price ($) 96,863 101,891 98,230 92,596 91,632 90,628 85,084
Median Sale Price ($) 80,000 80,650 80,000 79,900 75,500 76,750 69,950
Average Property Tax/Average Sale Price 1.21 1.20 1.18 1.30 1.71 1.54 1.47

Note: Each year is based on January through September averages.
Source: Mid-Eastern Indiana Association of Realtors (MEIAR)

Social Safety Net

The past year has seen a considerable increase in the number of food stamp recipients (see Table 5). In 2010 (January to May average), the monthly dollar value of food stamps issued increased by more than 24 percent to exceed $2.2 million. The average number of recipients increased by 17.5 percent to over 16,400 recipients (14.2 percent of the population) from 2009 to 2010. This change is significantly larger than the 2008 to 2009 change of only 6.8 percent and may be due in part to processing changes at the government agency level.

Table 5: Food Stamp Recipients in Delaware County, Year-to-Date 2003 to 2010

Year Average Monthly Food Stamps Issued Number of Food Stamp Recipients Number of Households Receiving Food Stamps
2003 $944,092 11,044 4,969
2004 1,075,295 12,452 5,744
2005 1,501,846 14,480 6,631
2006 1,346,939 14,099 6,596
2007 1,397,244 14,289 6,818
2008 1,417,000 13,089 6,227
2009 1,787,958 13,981 6,533
2010 2,220,867 16,423 7,553

Note: Each year is based on January through May averages.
Source: STATS Indiana, using FSSA data

Outlook

Manufacturing in the Muncie MSA took a hit in 2010 with the loss of more than 300 jobs; however, there are reasons for optimism. Several companies have announced location or expansion plans in Delaware County over the next few years. Progressive Rail is moving into the former ABB facility and is expected to ultimately have 650 positions.1 Mursix is expanding and expects to add between 150 and 250 jobs over the next five years.2 Magna Powertrain is expecting to add 50 new jobs over the next year.3 Fort Recovery Industries is expecting to add 40 new jobs.4 This is promising news for many manufacturing workers currently out of work.

The Muncie MSA has seen its share of decline due to the 2007-2009 recession. Recently, a few economic factors such as labor force statistics and new residential construction have shown some improvement, but Muncie still is struggling to regain its prosperity from the Borg Warner days. In the coming year, we expect employment to stabilize and begin to increase toward the end of 2011. We expect income growth to show small positive increases in the 1 percent to 2 percent range as the economy continues to recover.

Notes

  1. “Our View: Job Announcements Welcome,” The Star Press, November 3, 2010.
  2. “Construction to Begin on Mursix’s New HQ,” Inside Indiana Business, May 10, 2010, www.insideindianabusiness.com/newsitem.asp?ID=41583.
  3. “Michigan Automotive Supplier Expanding in Indiana” Inside Indiana Business, October 8, 2010, www.insideindianabusiness.com/newsitem.asp?ID=44046.
  4. “Business Line,” The Star Press, November 5, 2010.