It sounds like faint praise, but for the Detroit metro any net job growth is good news. Payroll employment ticked up in May and June after stagnating in the second half of 2013, and declining in early 2014. Despite the job gains, the metro area unemployment rate increased to 8.4 percent after climbing in May as well. It would be premature to say that the second quarter net job gains are indicative of an upside breakout from Detroit’s stalled jobs machine. Still, the moderate net gains are a good sign that will hopefully be extended. We are forecasting weak, but improved job growth for the Detroit metro area through 2015. This will bring the unemployment rate down gradually over the year ahead, finishing 2015 at a still-elevated 7.2 percent.
The Southeast Michigan Purchasing Managers Index for July increased strongly to a very solid 60.0 percent, indicating rapidly improving economic conditions for area manufacturers. The employment sub-index was also strong. However, it is noteworthy that the SE Michigan employment sub-index was in positive territory even as overall payroll employment was flat-to-declining.
The trial to determine the timing of the City of Detroit’s potential exit from bankruptcy was set to begin on August 21, as of our publication cut-off. Many creditors have already indicated their approval of the city’s plan to significantly reduce the $18 billion of debt, but the bankruptcy judge must rule that the plan is fair and feasible for it to be implemented. Bond insurers are expected to push back in the trial, as they stand to lose significantly if Detroit is allowed to default. The conclusion of the trial will diminish the pall of uncertainty enveloping Detroit and hopefully mark the passage into a new era of financial sustainability for the city.
Anecdotal reports suggest that boat sales are improving statewide. Boat purchases are usually highly discretionary, so they are a bellwether for improving consumer confidence at the regional level.
Click here for the complete Detroit MSA Regional Economic Update: Detroit 2014Q2.