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Muncie Forecast 2011

Dagney Faulk, Ph.D.

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

Kevin Kuhlman

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

*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

*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

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

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

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

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.