Improvement in Central West Michigan’s unemployment rate stalled in the third quarter, as unemployment rose 0.2 percentage points to 6.7 percent. Even so, the region’s unemployment rate remains well-below the September state level of 8.2 percent. Ann Arbor maintains the lowest unemployment rate of the region, at 5.0 percent, although Grand Rapids, Kalamazoo and Lansing have unemployment rates at or below 6.5 percent as of September. A revitalized auto manufacturing sector helped boost employment across the region in the first half of 2012, but payrolls declined by 1.0 percent in the third quarter. Modest payroll growth should resume in the fourth quarter, and continue into 2013. Central West Michigan furniture manufacturers are feeling steadier, but demand is expected to be flat through the remainder of 2012 as office construction remains weak nationally.
Home prices in Central West Michigan fell 2.6 percent in 2011, compared with a 4.3 percent decline nationally, according to the FHFA home price index. Thus far in 2012 home prices have declined only modestly, by about one percent, and should continue to stabilize, moving into positive territory over the course of 2013. Housing starts in the region have risen steadily over the three quarters of 2012, driven mostly by improvement in single-family construction. Commercial construction activity is also picking up selectively, particularly in the vibrant Ann Arbor area.
Looking ahead, the Central West Michigan region faces economic challenges stemming from relatively weak population growth. Population growth in the area is expected to continue to lag that of the nation. Incomes in Central West Michigan are expected to grow in the range of 3.5 percent through 2013, roughly in line with national income growth.
Click here for the complete 2012Q4 Central West Michigan Regional Economic Update: CentralWestMI 2012Q4.