Michigan to Benefit from Automaker Investment

Michigan economy is at a crossroads. The economic recovery fueled by the rebounding auto sector has been a tremendous positive for the state, but that is largely played out. We expect auto sales in 2017 to step down from the record 17.6 million units of 2016, to about 17.2 million units in 2017. Manufacturing job growth in Michigan eased to barely positive as of this March. Looking ahead, we expect manufacturing industries to gradually shed jobs in the state as auto production eases and new technology drives productivity growth. Recently, Ford has announced that they will cut about 10,000 jobs worldwide, as they face pressure to bolster profitability. To date, manufacturing has been supportive of solid overall job growth in the state. This March, Michigan had 1.9 percent more payroll jobs than it did in March 2016, while the U.S. gained 1.5 percent. Despite stronger than average job growth, the state’s unemployment rate increased from a low of 4.8 percent in June 2016, to 5.1 percent this March, as the U.S. unemployment rate declined. Even with the rebound in the auto industry, net-migration to Michigan has remained negative since the late 1990s, meaning that more people leave the state every year than move to it. This data may be substantially revised with the 2020 census, but recent estimates show that Michigan lost a net of about 15,000 people in 2015 to other states and countries. Persistent negative net-migration has brought population growth down to a barely positive 0.1 percent estimated for 2017. Declining auto sales and weak population growth will pull job creation in the state back below the U.S. average.

For a PDF version of the complete Michigan Economic Outlook, click here:  MI_Outlook_0517.

 

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