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The official numbers show small improvements in the Muncie area economy during 2013. The unemployment rate is down. Nonfarm employment increased as did average weekly wages. The housing market, particularly real estate sales, continues to improve, and local real estate agents indicate that there are shortages in some segments of the market. However, the job gains of the past year are not likely to persist. In September, IU Health Ball Memorial Hospital, Delaware County’s largest employer, announced that 120 people would be laid off by the end of 2013. Local software maker Ontario Systems recently announced a layoff of 20 workers. These job losses will hamper an already fragile recovery. Earlier this year, Magna Powertrain announced that it is adding up to 76 jobs over the next few years, and recently Progress Rail announced the hiring additional workers on short-term contracts, but net gains in employment in the county are likely to be small.¹

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 August 2013 made a substantial improvement from January 2013, decreasing from 10.4 percent to 8.6 percent. This is also lower than one year ago (August 2012) when the unemployment rate was 9.7 percent (see Table 1). However, Delaware County’s unemployment rate is still higher than Indiana’s rate of 7.5 percent (not seasonally adjusted) in August 2013. Similar to the situation in 2012, the number of unemployed workers decreased at a faster rate (down 20.7 percent) than the change in the labor force (down 4 percent) in 2013. The decrease in unemployment rate is due in part to a smaller labor force as around 2,000 people left the labor force in Delaware County. The change in the number of unemployed workers is similar to the state of Indiana which saw a 21.3 percent reduction. However, Indiana’s labor force went in the opposite direction with a 1 percent increase.

Table 1: Labor Force and Unemployment, Delaware County, August 2012 to August 2013

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

For the third straight year, nonfarm employment increased in Delaware County with 550 more jobs. This reverses the 2007–2010 trend where nonfarm employment lost 4,400 jobs. For the third straight year, manufacturing jobs increased and the result was an additional 75 jobs in 2013. Trade, transportation and utilities was the industry sector that provided the largest share of the private nonfarm employment increase with 213 jobs, while government (including public schools and hospitals) added 500 jobs (see Table 2).

Table 2: Muncie Metro Employment by Industry, Year-to-Date 2012 to 2013*

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

Average weekly wages in Delaware County rose for the second straight year, increasing from $661 to $682 (3.2 percent). This was also the eighth straight year that first quarter average weekly wages either increased or remained constant (see Table 3). A majority of the industry sectors in 2013 (13 of 18) experienced positive increases in weekly wages ranging from 0.4 percent to 10.2 percent. Seven of these sectors increased 5 percent or more: utilities (10.2 percent), health care and social services (8.6 percent), arts, entertainment and recreation (7.4 percent), finance and insurance (6.8 percent), professional, scientific and technical services (6.0 percent), real estate, rental and leasing (5.9 percent) and information (5.5 percent). Five sectors saw a decline in average weekly wages in 2013: construction, wholesale trade, educational services, management of companies and enterprises, and accommodation and food services.

Table 3: Average Weekly Wages in the Muncie MSA, 2013 Q1

Note: Data for agriculture, forestry, fishing and hunting and mining are not included due to nondisclosure requirements.
Source: U.S. Bureau of Labor Statistics & Indiana Department of Workforce Development

The inflation rate between the first quarters of 2012 and 2013 was 1.7 percent, so workers in more than half of the sectors experienced real wage growth over this period.²

Housing

After 2011 and 2012, it looked like new housing construction was on the rebound. However, the number of residential building permits dropped substantially—from 47 permits in 2012 to 22 permits in 2013 (see Table 4). There were mixed results in the residential real estate market in 2013. On the positive side, the number of units sold increased for the second straight year—from 713 units in 2012 to 826 units in 2013. However, the average number of days on the market increased by 10 and the average sales price decreased by $6,621 (falling from $92,213 in 2012 to $85,592 in 2013). These changes put the 2013 numbers—average days on the market and average sales price— back to 2011 levels (see Table 5).

Table 4: Delaware County Residential Building Permits, Year-to-Date 2002 to 2013

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

Table 5: Residential Real Estate Sales, Delaware County, January to September, 2006 to 2013

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

Social Safety Net

For the fifth straight year, there were increases in the dollar amount of food stamps issued, the number of food stamp recipients and the number of households receiving food stamps (see Table 6). However, the rate of growth in food stamps issued and recipients has been declining over the past three years. In 2013, the dollar amount of food stamps issued was $2.7 million per month. This is an increase of 3.0 percent compared to the increase of 5.9 percent in 2012 and the increase of 10.1 percent in 2011. The number of food stamp recipients topped 20,000 per month (for the first time) in 2013, an increase of 3.2 percent compared to the increase of 6.3 percent in 2012 and the increase of 11.1 percent in 2011. In 2013, the number of households receiving food stamps was just slightly less than 10,000 per month. This is an increase of 4.1 percent compared to the increase of 8.7 percent in 2012 and the increase of 13.5 percent in 2011.

Table 6: Food Stamp Recipients in Delaware County, January to September Averages, 2005 to 2013

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

Outlook

The past year extended the period of slow growth that has become the “new normal” since the Great Recession. The decline in the labor force from 2012 to 2013 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. Approximately 17 percent of Delaware County’s population and 20 percent of households received food stamps in 2013. Several years of strong, positive employment and income growth are needed to alleviate the lingering effects of the most recent recession and the closing of large manufacturing plants and associated businesses over the past two decades in East Central Indiana.

In the coming year, we expect small gains in employment (1 percent) and income (in the 2 percent to 3 percent range) as the economy continues its slow recovery.³