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Muncie Forecast 2013

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 official numbers show noticeable improvements in the Muncie area economy during 2012. The unemployment rate is down. Nonfarm employment has increased by a respectable amount as have average weekly wages. The housing market, particularly real estate sales, has improved, and local real estate agents indicate that there are shortages in some segments of the market. There have not been any major announcements of new businesses locating in the area or closings of existing manufacturing facilities, but several of the area’s major manufacturers are humming along.

This article includes the most current data available at the time of writing 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 in 2012 showed very healthy improvement, decreasing from 10 percent to 8.8 percent from January to September (see Table 1). This is also lower than one year ago (September 2011) when the unemployment rate was 9.9 percent. However, Delaware County’s rate is still higher than Indiana’s rate of 7.5 percent (not seasonally adjusted). In 2012, we have a different scenario than 2011 with the changes in the number of unemployed workers and the labor force. In 2011, the number of unemployed workers decreased at a faster rate (down 7.1 percent) than the increase in the labor force (up 2.0 percent). However, from January to September in 2012, the labor force had a slight reduction of 0.8 percent and the number of unemployed persons also decreased but at a higher rate of 12.6 percent. This is similar to Indiana as a whole where there was a slight reduction in the labor force in 2012 (-0.3 percent) and a larger decrease in the number of unemployed workers (-18.7 percent).

Table 1: Labor Force and Unemployment, Delaware County, September 2011 to September 2012

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

There was a turnaround in nonfarm employment in 2012. In every year from 2007 through 2011, nonfarm employment decreased for a total reduction of about 4,400 jobs. However, nonfarm employment increased by 1,244 in 2012. Delaware County has not seen this large of an increase in nonfarm employment since 1995. Manufacturing was partially responsible with an increase of 189 workers—the largest increase among the sectors. Manufacturing steadily declined from 2003 through 2011, losing 4,111 jobs. Private educational and health services had the second-largest addition of jobs with 178 (see Table 2).

Table 2: Muncie Metro Employment by Industry, Year-to-Date 2011 to 2012*

*January through September average.
Source: Bureau of Labor Statistics and Indiana Department of Workforce Development

After being relatively constant over the previous three years, average weekly wages in Delaware County rose 8 percent in 2012 to $662 (see Table 3). Most sectors in 2012 experienced positive increases ranging from 1.9 percent to 18.3 percent. Six of these sectors had increases of 10 percent or more: finance and insurance (18.3 percent), construction (13.9 percent), educational services (12.3 percent), information (11.4 percent), real estate, rental and leasing (10.6 percent), and health care and social services (10.2 percent). Two sectors, management of companies and enterprises and arts, entertainment, and recreation saw a decline in average weekly wages in 2012.

The inflation rate between the first quarters of 2011 and 2012 was 2.8 percent, so workers in most sectors experienced real wage growth over this period.¹

Table 3: Average Weekly Wages in the Muncie MSA, 2011 Q1 to 2012 Q1

Note: D indicates that the data are not disclosable.
Source: Bureau of Labor Statistics and Indiana Department of Workforce Development

Housing

After a jump in new housing construction in 2011, the number of residential building permits leveled off and even declined a bit this year going from 59 in 2011 to 52 in 2012 (see Table 4).

Table 4: Delaware County Residential Building Permits, Year-to-Date 2001 to 2012

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

The residential real estate market rebounded in 2012 in all measurable aspects. The number of units sold increased from 635 in 2011 to 713 in 2012 and the average number of days on the market decreased. The average sales price had a substantial increase of more than $6,200—increasing from $85,957 in 2011 to $92,213 in 2012. This is the highest average sales price since 2007 and the second straight year that the average sales price has increased (see Table 5).

Table 5: Residential Real Estate Sales, Delaware County, January to September Averages, 2005 to 2012

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

Social Safety Net

For the fourth straight year, the dollar amount of food stamps issued and the number of food stamp recipients increased (see Table 6). However, these increases have been declining over the past two years. In 2012, the dollar amount of food stamps issued averaged almost $2.7 million per month. This is an increase of $146,782 (5.8 percent) compared to the $218,145 (9.5 percent) increase in 2011 and the $370,551 (19.2 percent) increase in 2010. The number of food stamp recipients averaged 19,854 per month in 2012. This is an increase of 1,149 (6.1 percent) compared to the increase of 1,791 (10.6 percent) in 2011 and the increase of 2,461 (17 percent) in 2010.

Table 6: Food Stamp Recipients in Delaware County, January to October Averages, 2004 to 2012

Note: Dollar amounts not adjusted for inflation.
Source: STATS Indiana, using FSSA data

Outlook

There has been too much variation in the data over the past few years to get too excited about the positive changes in the local indicators during the first three quarters of 2012. The decline in the labor force over the past year indicates that discouraged workers are a persistent issue and the continued increase in the number of food stamp recipients indicates ongoing economic distress for many families in Delaware County. Several more quarters (even years) of positive employment and income growth are needed to alleviate the lingering effects of the most recent recession.

In the coming year, we expect small gains in employment (1 percent) and income (in the 2 percent range) as the economy continues its slow recovery.²