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Muncie Forecast 2018

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

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

The Muncie area economy continued to grow slowly over the past year. Nonfarm employment increased by less than 1 percent, while average weekly wages increased by about 6 percent and the number and amount of food stamps issued decreased substantially. Residential home sales were strong and continued shortages of inventories in the $120,000 to $250,000 have not spurred much new construction. The number of building permits issued actually decreased relative to the previous year and are much lower than pre-recession levels.

The two biggest news stories were not directly related to the business sector but will affect local businesses, economic development prospects and the ability of Muncie to attract new households to live in the area.

  • During May 2017, media reported an FBI investigation into alleged corruption in Muncie city government which has resulted in the indictment of one government official.1 The investigation continues.

  • After years of fiscal distress, during 2017, the State designated Muncie Community Schools, the largest school corporation in the county, as a fiscally impaired school corporation and appointed an emergency manager to implement a deficit reduction plan to stabilize the corporation’s finances by the end of the year.2 The deficit reduction plan included closing three elementary schools and reducing the number of teachers.3 The school corporation’s enrollment decreased by another 500 students as more families moved their children out of Muncie schools.4

Some of the highlights from 2017’s business news included the closing of a local grocery store chain and the purchases of the shuttered Borg Warner plant and a local aquaculture facility. After closing several stores in Muncie over the past decade, Indiana-based Marsh Supermarkets filed for bankruptcy in spring 2017 and closed over the summer.5 Two of the four remaining locations were purchased by Kroger, which plans to open them under the Pay Less brand.6 The former BorgWarner plant, which closed in 2009, was sold over the summer.7 Most of the 1-million-square-foot building has since been demolished leaving about 200,000 square feet of space to be reused. Bell Aquaculture, an Albany-based fish farm that had been struggling financially, was purchased by AquaBounty Technologies to grow genetically engineered salmon.8

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 showed much variation but ultimately fell over the course of the year, decreasing from 5.6 percent in January to 4.3 percent in September (see Table 1). This September rate is lower than one year ago. Delaware County’s unemployment rate continues to be higher than Indiana’s rate of 3.6 percent (not seasonally adjusted) during September 2017. The labor force in the Muncie MSA ranged between 54,000 and 55,000 people during most months of the year, which is slightly lower than the pre-recession peak and much lower (by about 10,000 people) than the metro area’s labor force during the mid-1990s.

Table 1: Labor force and unemployment in the Muncie metro

Year Month Labor Force Unemployment Unemployment rate
2016 September 55,236 2,581 4.7
October 55,227 2,551 4.6
November 54,916 2,478 4.5
December 54,673 2,596 4.7
2017 January 54,678 3,048 5.6
February 54,997 3,000 5.5
March 54,733 2,613 4.8
April 54,780 1,778 3.2
May 53,801 1,835 3.4
June 54,383 2,072 3.8
July 54,294 2,380 4.4
August 54,258 2,783 5.1
September 55,152 2,387 4.3

Note: Data are not seasonally adjusted.
Source: U.S. Bureau of Labor Statistics

We use the monthly average of employment over the first three quarters of the year to examine changes in industry employment in the Muncie MSA. Nonfarm employment increased in 2017, adding 300 jobs (0.6 percent) compared to the previous year (see Table 2).

Table 2: Year-to-date Muncie MSA employment

Industry 2013 2014 2015 2016 2017 Change since 2016 Percent change,
2016-2017
Total nonfarm 50,233 49,389 50,711 51,000 51,300 300 0.6%
Total private 37,467 37,011 37,811 38,433 38,622 189 0.5%
Goods-producing 5,578 5,644 5,789 5,856 5,911 55 0.9%
Manufacturing 4,178 4,178 4,311 4,311 4,344 33 0.8%
Private service-providing 31,889 31,367 32,022 32,578 32,711 133 0.4%
Trade, transportation and utilities 8,811 8,867 8,933 8,989 8,900 -89 -1.0%
Information 300 300 300 300 300 0 0.0%
Financial activities 2,489 2,422 2,444 2,500 2,500 0 0.0%
Private educational and health services 8,767 8,356 8,211 8,544 8,544 0 0.0%
Leisure and hospitality 4,978 4,944 5,089 5,444 5,556 112 2.0%
Other services 1,811 1,889 1,867 1,800 1,800 0 0.0%
Private service-producing—residual 4,713 4,538 5,178* 5,000* 5,111* 111 2.2%
Government (includes public schools and hospitals) 12,767 12,378 12,900 12,567 12,678 111 0.9%

*Estimated using available data 
Note: All data are January through September averages.
Source: U.S. Bureau of Labor Statistics and Indiana Department of Workforce Development

Nonfarm employment is still lower than pre-recession levels by more than 1,000 jobs, but overall continued to increase each year since 2014. Notably, the only sector to experience a decrease in employment was the trade, transportation and utilities sector, down 89 jobs (1.0 percent) since 2016. The remaining sectors fared better. The manufacturing sector increased by 33 jobs during 2017 (0.8 percent), and private service sector employment increased by 133 (0.4 percent). Government employment increased by 111 (0.9 percent) despite losses in the education sector. The leisure and hospitality sector also experienced growth (up 2.0 percent).

Quarter 1 average weekly wages in Delaware County increased from $693 to $736 (6.2 percent), as shown in Table 3. This marks an all-time high for average weekly wages (not adjusted for inflation). Wages in the Muncie MSA continue along the trend of being considerably lower than the state average, which increased from $845 to $919 (8.8 percent) between 2016 and 2017. This is the largest discrepancy between state and local average wages since at least 2001.

Table 3: Average weekly wages in Muncie MSA

Industry 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 Change,
2016-2017
Percent Change, 2016-2017
Total $682 $705 $725 $693 $736 43 6.2%
Management of companies and enterprises $1,807 $2,072 $2,475 $2,221 $2,206 -15 -0.7%
Utilities $1,538 $1,800 $1,730 $1,799 $2,155 356 19.8%
Wholesale trade $886 $966 $1,046 $987 $1,038 51 5.2%
Finance and insurance $892 $960 $964 $882 $1,035 153 17.3%
Manufacturing $888 $887 $921 $932 $963 31 3.3%
Professional, scientific and technical services $812 $840 $836 $846 $891 45 5.3%
Educational services $798 $852 $820 $827 $872 45 5.4%
Information $755 $768 $740 $811 $871 60 7.4%
Health care and social services $762 $776 $810 $775 $827 52 6.7%
Transportation and warehousing $803 $807 $827 $780 $823 43 5.5%
Construction $709 $711 $771 $782 $812 30 3.8%
Public administration $731 $665 $709 $723 $731 8 1.1%
Real estate and rental and leasing $697 $652 $689 $665 $642 -23 -3.5%
Administrative, support, waste management and remediation $440 $455 $465 $430 $539 109 25.3%
Retail trade $436 $446 $449 $451 $484 33 7.3%
Other services (except public administration) $431 $439 $464 $449 $480 31 6.9%
Arts, entertainment and recreation $263 $260 $275 $274 $302 28 10.2%
Accommodation and food services $231 $232 $245 $249 $264 15 6.0%

Source: U.S. Bureau of Labor Statistics and Indiana Department of Workforce Development

Only two industry sectors (the real estate and rental and leasing sector and the management of companies and enterprises sector) saw a decline in average weekly wages in 2017. The vast majority of the industry sectors in 2017 (16 out of 18) experienced positive increases in weekly wages ranging from 1.1 percent to 25.4 percent. Four of these sectors had an increase of 10 percent or more. The greatest increase took place in the administration, support, waste management and remediation sector (25.4 percent), followed by utilities (19.8 percent), finance and insurance (17.4 percent), and arts, entertainment, and recreation (10.2 percent).

The percent change in the inflation rate from first quarter 2016 to that of 2017 was 2.2 percent, so workers in 15 of the 18 sectors experienced real wage growth over this period.9

Housing

Building permit activity continues to be lower than pre-recession levels. There were eight new residential building permits issued during 2017, down 50 percent from 2016 (see Table 4). Single-family construction made up the majority of those eight new permits.

Table 4: City of Muncie year-to-date residential building permits

Year Total Single-family Multifamily
2007 35 28 7
2008 25 23 2
2009 6 6 0
2010 6 5 1
2011 33 29 4
2012 0 0 0
2013 10 10 0
2014 14 13 1
2015 3 3 0
2016 16 15 1
2017 8 6 2

Note: Each year is based on January through August totals for building permits issued within Muncie city limits. Data were unavailable for permits issued in Yorktown or unincorporated areas of Delaware County.
Source: U.S. Census Bureau

Residential sales decreased slightly during 2017; however, average days on the market also decreased to 59—an all-time low (see Table 5). Average sale price increased to $106,416 and has been higher than pre-recession levels for the past three years. Median sale price also continues to increase. Local real estate agents indicate that inventory is extremely low, especially for housing in the price range between $120,000 and $250,000.10

Table 5: Year-to-date residential real estate sales in Delaware County

2013 2014 2015 2016 2017
Units sold 826 717 882 910 904
Average days on market 144 103 84 75* 59
Average sale price $85,592 $94,839 $106,225 $103,090* $106,416
Median sale price $72,905 $80,000 $88,000 $87,900* $90,275

*These 2016 statistics are calculated for January through June 2016. All other statistics are calculated for January through September.
Source: Kathy Smith with the Mid-Eastern Indiana Association of Realtors (MEIAR)

Social safety net

With increasing employment and wages in the metro area, the dollar amount of food stamps issued decreased for the fourth year in a row (see Table 6). Delaware County issued $1.77 million per month in food stamps in 2017. This is a 10.2 percent decrease since 2016 and the smallest amount issued since 2008. The number of food stamp recipients decreased to 14,614 (-9.8 percent), which is the lowest since 2009. In addition, the number of households receiving food stamps decreased to 7,000 (-10.6 percent), which is also the lowest since 2009.

Table 6: Food stamp recipients in Delaware County

Delaware County Total food
stamps issued
(monthly average)
Number of food
stamp recipients
(monthly average)
Number of households
receiving food stamps
(monthly average)
2013 $2,740,242 20,453 9,934
2014 $2,463,746 19,839 9,712
2015 $2,382,671 18,691 9,287
2016 $1,973,066 16,204 7,828
2017 $1,772,604 14,614 7,000

Note: Each year is based on January through August monthly averages. Dollar amounts are not adjusted for inflation.
Source: STATS Indiana, using Family and Social Services Administration data

Outlook

The past year provided evidence that Muncie continues its long, slow recovery. The unemployment rate showed much variation over the course of the year, while nonfarm employment increased slightly. Housing construction (measured by the number of building permits issued) is sluggish, and residential real estate sales continued to increase to the point of having inventory shortages in some price ranges. Wages increased and fewer households are relying on the social safety net, as seen in the continued decrease in food stamp usage.

The Indiana University Center for Econometric Model Research’s forecast predicts that Muncie MSA employment will grow by half a percentage point during 2018 and then slow down in the next few years, while income is projected to grow at 4.3 percent during 2018. Population growth projections are flat.

Notes

  1. K. Roysdon, “Timeline: Muncie FBI Probe’s History,” The Star Press, October 12, 2017.
  2. S. Slabaugh, “A State Board Will Name an Emergency Manager of MCS on Monday,” The Star Press, June 24, 2017.
  3. S. Slabaugh, “Muncie School Board Votes to Close 3 Schools,” The Star Press, April 14, 2017.
  4. S. Slabaugh, “Muncie Schools Enrollment Drops to 5,183,” The Star Press, September 22, 2017.
  5. K. Roysdon, “How Long Would Marsh Stores Stay Empty?” The Star Press, May 24, 2017.
  6. K. Roysdon, “Kroger: First Pay Less Opening Date Forecast,” The Star Press, September 20, 2017.
  7. K. Roysdon, “BorgWarner Plant Sold, to be Demolished,” The Start Press, August 16, 2017.
  8. S. Slabaugh, “Bell Aquaculture Sold for $14 Million,” The Star Press, July 24, 2017.
  9. Inflation rate for Midwest region using the CPI for all urban consumers, not seasonally adjusted.
  10. Kathy Smith, Quarterly Real Estate Market Update, Third Quarter 2017.
  11. Forecasts come from the Indiana University Center for Econometric Model Research (https://ibrc.kelley.iu.edu/analysis/cemr/), September 2017.