As automobile sales hit cyclical highs, the Central West Michigan labor market is peaking. Since the end of 2009, the unemployment rate for the region has contracted by an average of one-third of one percent every quarter, outpacing the national average. The Grand Rapids area has led job growth in the region, with total nonfarm employment increasing nearly five percent over the past year ending July. Employment in the mining, logging, and construction sector increased more than eight percent across Central West Michigan, while the leisure and hospitality sector expanded more than six percent over the same period. Employment growth in these sectors can be attributed to households strengthened by tighter labor markets. The professional/business services sector is also experiencing strong growth. Manufacturing employment continues to grow, but employment gains will ease. The impact of pivoting auto manufacturing to Mexico will impact the area to some level. The first casualty, Leon Plastics, cited this reason expressly for closure.
Much like wage growth in the region, home prices in Central West Michigan will lead the state, but lag the nation. This is expected as inflationary pressure has remained subdued across the region. Housing starts skyrocketed in the second quarter of 2015, while prices saw their weakest quarterly gain in over a year. Multifamily construction is showing strength, as mixed-use developments emerge from Lansing’s novel Outfield development to downtown Kalamazoo. Multi-family housing starts are at their hottest in over a decade.
The region is dedicated to diversification: Lansing is elevating its prominence in the world of insurance, while Kalamazoo and Grand Rapids are improving livability with revitalization programs targeting their rivers. The presence of more service jobs in the region will help it better weather potential manufacturing weakness.
Click here for the complete Central West Michigan Regional Economic Update: CentralWestMI_2015Q3.