Detroit Job Growth Weak While Home Values Grow

Detroit metro-area payroll employment growth was weak in the first half of 2013, while the unemployment rate continued to drop. Payroll employment grew at 0.6 percent year over year in 2013Q1 and 0.5 in 2013Q2. Current year-over-year job growth is much cooler than a year ago. Detroit payroll employment grew by 3.4 percent in 2012Q1 and 2.6 percent in 2012Q2. July 2013 employment numbers show a slow start for Q3 with payroll employment increasing only 0.5 percent from a year ago. Fortunately, the household measure of employment continued to outpace the growth in the labor force, driving the unemployment rate down from 10.4 percent in 2012Q2 to 9.4 percent in 2013Q2, still higher than the national average of 7.6 percent in Q2. Ford’s Flat Rock Assembly Plant began production on the Ford Fusion. The move added 1,400 new jobs to the facility and will boost manufacturing numbers in the region.

Detroit’s housing market is improving. Housing starts reached a seven-year high in 2013Q2. Total starts reached a 6,043 unit annual rate in Q2, up 26 percent from a year ago and the highest unit annual rate since 2006Q4. Single-family structures led the way, growing 21.6 percent from a year ago to a 5,378 unit annual rate in Q2. Homeowner equity continues to grow. According to the S&P Case-Shiller Home Price Index, single-family home values in Detroit grew by 16.1 percent from a year ago in Q2, well above the Composite-20 average of 12.1 percent.

The City of Detroit filed for bankruptcy protection on July 18th. The city’s financial woes will continue to be a drag on the regional economy as government services are cut back, creditors settle, and budgets are re-aligned. Funding costs for many Michigan nameplates have increased as a result of Detroit’s filing. However, the bankruptcy protection offers the City of Detroit the breathing space it needs to plan for a sustainable economy.

Detroit 2013Q2

Click here for the complete Detroit MSA Regional Economic Update: Detroit 2013Q2.

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