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Muncie Forecast 2012

Dagney Faulk, Ph.D.

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

Phillip E. Morris

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

The past year has been sluggish in east-central Indiana, but there are signs of increased economic activity. Delaware County’s contribution to the I-69 Alternative Energy Corridor is the Park One complex, now home to Brevini Wind, VAT Energies and Mursix. Earlier this year, Brevini Wind started production of it largest project to date: manufacturing gearboxes for Finland-based Winwind.¹ Progress Rail Services opened a facility in a long vacant industrial building and in October displayed the first two locomotives produced by its new Muncie manufacturing facility. Presently, the number of workers is around 150 but is expected to increase.² Local officials recently took a trip to Turkey, resulting in the announcement that Kermit USA plans to establish its U.S. headquarters in Muncie, creating 70 new jobs by 2016.³

This article includes the most current data available on various measures of economic activity from public sources for the Muncie metropolitan area (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 for September 2011 made a healthy improvement from January 2011 decreasing from 10.6 percent to 9.3 percent. This is also lower than one year ago (September 2010) which had an unemployment rate of 10.0 percent. However, this is still higher than Indiana’s rate of 8.5 percent (not seasonally adjusted). Similar to last year, the number of unemployed workers has decreased at a faster rate than the increase in the labor force. From January through September, the number of unemployed workers decreased by 9.6 percent, while the labor force increased by 3.0 percent. This led to the decrease in the unemployment rate (see Table 1).

Table 1: Labor Force and Unemployment for Delaware County, September 2010 to September 2011

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

Again in 2011, non-farm employment decreased. However, the decrease of 433 jobs was less than 2010’s decrease of 811 and substantially less than the job losses between 2008 and 2009, which exceeded 2,500. As in 2010, manufacturing lost the most jobs, down 89. However, these manufacturing losses were less than 20 percent of jobs lost in 2010 (-467). Private educational and health services had the largest increase in jobs with 56, which is a major turnaround from 2010 where this industry lost 122 jobs. Financial activities had the second-largest addition of jobs with 44 (see Table 2).

Table 2: Muncie Metro Employment by Industry, Year-to-Date 2010 to 2011

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

Over the past three years, average weekly wages in Delaware County have remained relatively constant with a level of $613 in 2011 (see Table 3). Changes in 2011 average weekly wages were split nearly 50/50 among the sectors with 10 increases and nine decreases. The largest increases were in utilities (21.1 percent), wholesale trade (6.6 percent) and retail trade (6.1 percent). The sectors with the largest decreases were arts, entertainment and recreation (-12.1 percent) and manufacturing (-7.3 percent). Over half of the sectors saw very little change (less than 3 percent) in either direction. Overall, average weekly wages across the county were not keeping pace with the inflation rate of 2.2 percent.

Table 3: Average Weekly Wages in the Muncie MSA, 2010:1 to 2011:1

Source: Bureau of Labor Statistics

Housing

Even though new housing construction remains substantially lower than it was from 2000 through 2006, building permits have made a respectable jump in 2011 increasing to 59 from 30 in 2010 (see Table 4). This contrasts with the activity of the real estate market. The number of units sold decreased from 714 in 2010 to 635 in 2011 and the average days on the market increased. However, the average sale price increased from $85,084 in 2010 to $85,957 in 2011. This is the first increase in the average sales price of homes since 2005 (see Table 5).

Table 4: Delaware County Residential Building Permits, Year-to-Date 2000 to 2011

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

Table 5: Residential Real Estate Sales, Delaware County, January to September Averages, 2003 to 2011

Source: Jim Kouns with the Mid-Eastern Indiana Association of Realtors (MEIAR)

Social Safety Net

Again in 2011, there were increases in the dollar amount of food stamps issued and the number of food stamp recipients (see Table 6). However, these increases were less than what occurred in 2010. In 2011, the dollar amount of food stamps issued was $2.52 million per month. This is an increase of $218,145 (9.5 percent) compared to the $370,551 (19.2 percent) increase in 2010. The number of food stamp recipients in 2011 was 18,706 per month. This is an increase of 1,791 (10.6 percent) compared to the increase of 2,461 (17 percent) in 2010.

Table 6: Food Stamp Recipients in Delaware County, January to October Averages, 2003 to 2011

Note: Each year is based on January through October monthly averages. Dollar amounts not adjusted for inflation.
Source: STATS Indiana, using FSSA data

Outlook

The official numbers indicate that Muncie’s economy did not fare particularly well over the past year, although there are glimmers of growth from individual businesses in the area. While the unemployment rate has decreased, so did the labor force and the overall level of employment in the area. The rate of job declines has diminished, average wages are stable but the number of people on food stamps increased. The number of residential building permits increased as did the average sale price of single-family homes, but the number of units sold decreased.

In the coming year, we expect small gains in employment (1 percent) and income (in the 3 percent range) as the economy continues its slow recovery.⁴