Slow Employment Growth Expected

March 11, 2003
| By Katy Rent |
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KALAMAZOO — The W.E. Upjohn Institute is projecting employment growth in West Michigan is expected to be very lackluster in 2003.

Total employment is forecasted to increase by only 0.3 percent during 2003 in the three metropolitan areas of West Michigan, which is up slightly from the 0.1 percent employment decline the area experienced in 2002.

Employment in the area’s goods-producing sector is expected to fall by 1.1 percent during the year, which is the same as last year’s decline. The forecasted employment loss is due to both an expected slowdown in car sales, falling from 16.7 million units to between 16.1 million and 16.4 million units and continued recession-like conditions in office furniture.

Furthermore, while the institute believes that the national economy will rebound slightly during the year, manufacturing employment growth will lag, nationally and locally, as initial output gains are achieved through productivity growth.

Employment in 2003 in the area’s service producing sector is forecasted to increase by 1 percent. Government employment is expected to be flat, increasing by just 0.1 percent, due to the budgetary problems facing the state. In 2004, total employment is expected to increase by 1.3 percent as the national economic recovery takes hold.

Lackluster employment gains are forecasted for all three metropolitan areas in 2003. Employment in the Grand Rapids-Muskegon-Holland MSA is expected to increase by only 0.3 percent. The four-county area is starting the year on a sour note. Robert Bosch GmbH announced that it will close its Kentwood plant, laying off 1,200 workers.

Total employment in the Benton Harbor MSA is forecasted to increase by 0.5 percent this year and total employment is expected to increase by 0.8 percent in the Kalamazoo-Battle Creek MSA in 2003.

Total employment rose by 0.1 percent in the three metropolitan areas of West Michigan during the fourth quarter. Still, the region’s unemployment rate fell to 5.8 percent in the quarter, down from 6.1 percent in the previous quarter. The region’s economic indexes were mixed during the quarter, suggesting that the region’s employment conditions may not improve during the next several months.

The composite index of Help-Wanted Advertising dropped by 5.4 percent during the quarter. However, the region’s Index of Leading Indicators was up by 1 percent, with all three regional components of the index improving during the quarter: production employees worked longer hours, new claims for unemployment insurance fell and the number of dwelling units put under contract rose.

Looking at the specific regions, total employment rose by 0.2 percent during the fourth quarter in the four-county MSA of Allegan, Kent, Muskegon and Ottawa counties. The area’s unemployment rate inched down to 6.1 percent during the quarter.

The area’s economic indicators did not improve in the fourth quarter, suggesting that the area’s employment conditions will remain sluggish in the coming months. The area’s Index of Help-Wanted Advertising fell by 4.6 percent during the quarter, and the area’s Index of Leading Indicators was flat.

Production workers logged longer hours, and the number of initial claims for unemployment insurance declined modestly. The number of housing starts was off by 0.3 percent.

In the Grand Rapids area, total employment rose an estimated 0.3 percent during the fourth quarter, while the number of employed residents increased by 0.2 percent. The quarter’s small increase in employment contributed to its unemployment rate falling from 6.2 percent in the third quarter to 6.1 percent in the fourth quarter.

Three of the area’s four economic indicators were off in the fourth quarter, suggesting that employment will remain lackluster during the coming months. The area’s Index of Help-Wanted Advertising fell by 3 percent, the number of new unemployment insurance claims rose 10.7 percent and the number of new dwelling units put under construction was down 16.6 percent in the quarter. On the other hand, the area’s Purchasing Management Index rose slightly in January.           

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