Michigan is enjoying widespread prosperity, as prolonged strength in automobile sales and the broader manufacturing complex has acted as a great stabilizing force in the state. It is widely understood that the pace of this improvement in the manufacturing sector will subside, testing the strength of the diversity of the state economy. The economic climate in the state is broadly positive, as housing markets continue to gather momentum, while maintaining affordability, and job growth remains diverse. As reported by the BLS, the strongest year-over-year job growth in Michigan for March was concentrated in the construction, financial activities, professional/business services, and leisure/hospitality sectors. This is an ongoing trend. In the coming year, it is the service sector, paired with improving real estate conditions, that will propel Michigan.
The Grand Rapids area saw an unemployment rate of 3.4 percent in March, well below the national rate of 5.0 percent. Since midyear 2015, the Grand Rapids area has been adding jobs at a faster pace than the U.S. average. The Grand Rapids Business Journal reports that salary growth in the region ranks seventh nationally. Labor markets are tight, and reports of difficulty in finding people to fill positions from restaurant staff to technical management are surfacing. Although almost one-in-five jobs in the region remains in manufacturing, there has been persistent strength in the construction, financial activities, education/health services, and leisure/hospitality sectors.
Following in step with labor markets, housing markets in Central West Michigan are becoming very tight. The Grand Rapids Association for Realtors reports that the average months of inventory for real estate so far this year is 1.6 months. Over the year ending in March, CoreLogic reports that Grand Rapids area home prices are up 7.7 percent. Commercial real estate remains tight as well, resulting in more new development.
Grand Rapids remains a bright spot in the larger Michigan economy, as its diversity and entrepreneurship show no signs of subsiding. The tech company Switch, who was lured to the area for its next data center, is beginning to hire some of the estimated 1,000 jobs it will add over the next decade. The Medical Mile continues to see new projects, and projects like Studio C!, expected to have a $369 million impact over the next decade, are coming closer to reality. Construction is slated to begin on the $380 million Red Cedar Renaissance development in Lansing this June. Commitment to attracting new industry and growing employment in the region is evident, as initiatives like SmartZones continue to gain footing throughout the region.
Click here for the complete Central West Michigan Regional Economic Update: CentralWestMI 2016Q2.