U-M: Michigan will gain 61,000 jobs next year

Michigan’s current streak of economic growth is likely to continue over the next two years, but at a substantially slower pace in the job market, University of Michigan economists said Friday in an annual forecast.

The economists predict gains of 61,100 jobs during 2016 and 64,800 jobs in 2017, thanks to the comeback of the housing market and sustained gains in Detroit Three automaker sales. Still, the new annual projected figures are below job gains of 84,600 expected this year.

The state’s sustained recovery will help lower the state’s unemployment rate from the current 5% to 4.8% at the end of next year and 4.5% at the end of 2017, they said.

To arrive at their forecast, the economists looked at barometers of economic health: growth in employment, growth in per capita income and growth in per capita gross domestic product, as well as declines in the unemployment rate.

The result? Michigan’s economy “has been on a bit of a roll for the past five or six years,” George Fulton, who is director of U-M’s Research Seminar in Quantitative Economics, said in a statement. “And the state appears to be poised to continue the ride for a while longer, although perhaps not at the same pace.”

In their annual forecast of Michigan’s economy, Fulton and colleagues Joan Crary, Gabriel Ehrlich and Donald Grimes said they expect Michigan to have gained more than 586,000 jobs during the economic recovery from summer 2009 through the end of 2017.

Those totals would restore the job levels to those last seen in the spring of 2003. It will also have recouped more than two-thirds of the jobs lost since mid-2000, a decade that policymakers have described as lost for its poor economic performance.

“Things are looking pretty good. The environment has stabilized and progress has been fairly impressive,” Fulton said. He gave an hour-long presentation on his forecast at an economic conference on the Ann Arbor campus Friday.

Economists who worked on the forecast said the smaller job gains projected over the next two years still amount to solid gains that keep up with national forecasts.

On Thursday, as part of a separate forecast, U-M economists delivered their most upbeat outlook for the U.S. economy in some time, including an extremely bullish forecast for vehicle sales.

Sales of cars and light trucks, averaging about 17.4 million this year, should reach 18 million next year and 18.1 million the year after, the U-M economists said. If achieved, those sales levels would mark one of the most sustained robust periods in history for the auto industry.

Other economists see a generally robust local economy for southeast Michigan as a result. “Real estate development in southeast Michigan remained strong through the third quarter,” Comerica Bank Chief Economist Robert Dye wrote in a report this week. “Single-family and multi-family housing starts were both up strongly from the previous year.”

Arguably, economic conditions in western Michigan are even stronger in some areas. A study by All Property Management recently found Grand Rapids to be one of the best rental markets in the nation, according to Dye.

In the U-M forecast released Friday, growth varies by sector. The sector including trade, transportation and utilities will account for 22,000 job gains through 2017.

The construction industry will add 22,000 jobs over the next two years. Leisure and hospitality jobs will grow by about 20,000 while manufacturing is expected to notch up by about 10,000 jobs during that time. That’s down from an annual average of about 20,000 job gains over the previous four years when auto plants roared to life.

“The deceleration in manufacturing job growth reflects the more mature stages of the recovery overall and slower growth in vehicle output moving forward,” Grimes said in a statement.

While the forecast is cause for optimism, the U-M economists caution that Michigan ranks “closer to the caboose than to the engine” in important economic measures including as per capita income and educational attainment.

“When the perspective is the absolute level of some key economic indicators, rather than the change in their values, the story is not as upbeat,” Fulton said during his presentation Friday. “What this tells us is that although we’ve made a fair amount of progress recently, we have a ways yet to go.”

Contact Matthew Dolan: 313-223-4743 or msdolan@freepress.com. Follow him on Twitter @matthewsdolan.