Columbus forecast 2019.

• Author: Brewer, Ryan M.

The Columbus metropolitan statistical area (MSA) has long supported a strong manufacturing-based economy linked to the transportation industry and light vehicle manufacturing. While structural changes have occurred over the years, dependence on these two industries continues as Columbus MSA gross domestic product (GDP) is approximately 50 percent durable goods manufacturing based. (1) Columbus has experienced eight years of solid economic growth since the Great Recession, excluding the minor 0.3 percent decline in GDP in 2016, which reflected a 3.5 percent decline in durable goods manufacturing and a 24.2 percent decline in real estate that were partially offset by increases in natural resources and trade. (2) With strong business investment plans, another strong year for Cummins, solid consumer confidence and strong (albeit declining) light vehicle sales in North America, Columbus should conclude 2018 on a positive note as we approach 2019.

Key measures

Employment and labor force: Since 2010, the Columbus MSA experienced nonfarm job growth of between 400 and 4,000 annually, resulting in a total increase of 12,600 jobs (see Figure 1). In the last 12 months, job growth of approximately 2,600 positions reflects a 5 percent increase in nonfarm positions.

The 55,100 jobs in Columbus attract approximately 9,500 workers (or 15.1 percent of the workforce) from Johnson, Jackson, Jennings, Brown and Marion counties. (3) Based on the same 2016 data, approximately 3,000 Bartholomew county residents (or 5.5 percent of the resident labor force) commute to Jackson, Marion, Johnson and Decatur counties for their jobs. Between 11,000 and 12,500 workers from outside Columbus will continue to be required for staffing local firms; therefore, commuting patterns would be expected to remain relatively stable. However, labor supply pressures are expected to increase as new employers, such as Amazon, enter markets in surrounding counties.

Labor force participation: Labor force participation rates for the U.S. and Indiana have remained relatively stable between 62 percent and 65 percent since 2014. The Columbus labor participation rate increased from 2014 to 2017 to a reading of 71 percent. (4) This high labor force participation rate reflects the growing tension between job need and talent availability in the area, placing pressure on firms seeking to expand or replace retiring employees. Additionally, pricing pressures may result as the high labor force participation rate coupled with the low unemployment rate results in competition for the limited labor resource pool.

Weekly earnings: Weekly earnings for the Columbus MSA have experienced impressive 56 percent growth from a low of $730 in 2009 to $1,140 in 2017 (see Figure 2). However, as the labor market has tightened between 2014 and 2017, weekly earnings have only increased 5 percent, while inflation (measured by national CPI-U) impacted consumer spending power by 4.5 percent during the same period. (5) Average weekly hours have remained relatively stable during this period between 37 hours and 39 hours per week. The rate of growth for average hourly earnings has declined during this same period from 6 percent in 2014 to 2 percent in 2017. (6)

Unemployment: The continuing economic strength in the U.S., Indiana and Columbus pushed the unemployment rate for the U.S. to 3.7 percent in September. Indiana's unemployment rate for September (not seasonally adjusted) was 3.0 percent, (7) the lowest September rate since 2000. Columbus' September unemployment rate of 2.2 percent (not seasonally adjusted) is also the lowest September unemployment rate since 2000. The Columbus MSA unemployment rate is slightly lower than any of the counties contiguous to Bartholomew, reflecting the solid employment base in this county. Table 1, which shows selected Indiana metros and micros, highlights that unemployment rates across the state are lower than the national average. This table also demonstrates the greater volatility of Indiana's unemployment rate with changes in national economic trends.

Planned business investment: Columbus continues with business investment planning, although the level is down from the recent peak in 2015 of $153.2 million. Six projects in 2017 totaling $80.7 million were followed by five projects in 2018 for $107.6 million. Since the Great Recession, an estimated $745 million of planned investment in the Columbus MSA was projected to create an estimated 3,200 jobs (see Table 2). With the planned investments announced in 2018, this business investment trend continues to reflect confidence by local businesses.

Economic indicators

Leading index for Indiana: The leading index for Indiana (LII) has been developed by the Philadelphia Federal Reserve Bank reflecting a six-month forecast that considers nonfarm payroll, average hours worked, the unemployment rate, wage and salary disbursements, housing permits, initial unemployment claims, delivery times and interest rate spreads. The LII has been trending down since reaching a peak of 2.5 in November 2013, reflecting Indiana's cyclical economy--which is even more pronounced in Columbus, where automotive supply and diesel engine components manufacturing drives the cash-flow bus. Because the LII has been consistently below 1 since April of this year, reaching a low of 0.5 in June, and because the LII has not been this low since 2011 (see Figure 3), this indicator gives pause to the Columbus MSA going forward.

Consumer sentiment: Consumer sentiment is a leading indicator developed by...