Moderate employment growth, led by autos – CBS Detroit


ANN ARBOR – The University of Michigan’s 60th Annual Economic Outlook Conference ended Friday afternoon with relatively bright prospects for the state’s economy.

UM economists George Fulton, Joan Crary and Donald Grimes predicted that the state will create nearly 50,000 jobs in 2013 and 61,000 jobs in 2014.

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Most of the job gains will come from a resurgent auto industry, which means the state has yet to take significant steps to diversify its economy. But job gains are also expected in high-wage sectors such as professional, business and scientific services.

The state has created 165,000 jobs since the end of 2009, ending a solid decade of job losses.

“For many reasons, it’s not hard to feel optimistic about Michigan’s economy,” said George Fulton, director of the UM’s Research Seminar in Quantitative Economics. “Our iconic auto sector has been strong, housing is showing signs of recovery, the highest-wage sectors have experienced the fastest growth, and the unemployment rate has fallen by five percentage points since the end of 2009. More Importantly, the fundamentals appear to be in place for the economy to continue to grow.

“For other reasons, it’s hard not to be a little disappointed too. The rebound from the recession has not been as robust as most past recovery episodes, unemployment remains historically high, and the state has only recovered one-fifth of the jobs lost since mid-2000. It’s a long time to come out of a deep hole, but at least we stopped digging deeper.

Manufacturing led the current recovery after a decade of declining employment, economists said. From the end of 2009 to the end of 2011, the manufacturing sector created 50,000 jobs, or more than 40% of the net job gain during this period in a sector which represents only 13% of the workforce. . This year, the sector will add 16,000 additional jobs and 23,000 additional jobs over the next two years.

“Almost half of all manufacturing jobs created over the next two years are directly attributable to the auto industry, and most of the rest are from auto-related industries,” Fulton said. “We predict that the auto industry will create an additional 10,000 jobs from the end of 2012 to 2014. Since the industry is so widely interconnected in the local economy, the effects of its direct contributions to job growth spill over into other parts of the private sector as well. “

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Along with manufacturing, the professional and business services sector has been Michigan’s other major generator of jobs for the past three years. The sector will add 27,000 jobs over the next two years, after adding 17,000 jobs this year.

Other major sectors expected to create jobs in 2013 and 2014 include trade, transport and utilities (which includes retail), 23,000 jobs; construction, 19,000 jobs; and private education and health services (the latter account for 90 percent of the segment), 15,000 jobs.

“Construction has been in the grip of a downturn in the building market in recent years, but we expect some recovery in this industry,” Fulton said. “Recent data from the local housing market suggests it may have started to recover. State residential building permits are on the rise, and the Home Builders Association of Michigan sees an improvement in new home construction this year from weaker gains in 2010 and 2011. “

Overall, Fulton and colleagues say Michigan’s sustained, albeit subdued, economic recovery will help reduce the state’s unemployment rate from the current 9.1 percent to 8.4 percent by year-end. next and 7.7% at the end of 2014, which will only be half a percentage point above the US rate at that time.

“Unemployment rates over the forecast period are historically high, but by mid-2014 they reached rates similar to the 7.9% on average from 1970 to 2008,” Fulton said. “Michigan’s pattern of job growth is consistent with a US economy that we see accelerate over the next two years, but with growth that remains subdued.

“Overall, however, this is good news. The recovery continues and activity levels show some recovery over the period, accumulating five years of growth after a decade of decline.”

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More than www.umich.edu/~rsqe.