The Lafayette Metropolitan Statistical Area (MSA) maintained its steady growth this year and is poised to continue this trend in 2018.
In 2017, nearly all industries in the region experienced both employment and wage increases, as well as low unemployment rates. The tightening housing market may be a challenge for the region if relief does not occur. Likewise, economic growth could be hampered by lack of labor as local businesses continue to expand.
The Lafayette MSA (which includes Tippecanoe, Benton and Carroll counties) has maintained a steady growth since the recession. Over the next several years, growth will likely continue due to the MSA's diverse industry portfolio and the expanding local university. These strengths, coupled with its geographic location, make the Lafayette region an attractive area to live and work.
The MSA has experienced continuous population growth--an addition of approximately 2,300 people per year between 2006 and 2016 (see Figure 1). The estimated 2017 population is 218,472, and the Indiana University Center for Econometric Model Research anticipates annual population growth of about 0.8 percent in the region through 2020.
The Lafayette MSA continued to maintain a lower unemployment rate than the United States and Indiana between August 2016 and September 2017 (see Table 1). These lower unemployment rates reflect the increasing demand and scarcity of workers within the MSA's diverse and strong economy. Last year's outlook predicted the MSA would see unemployment rates between 3.5 and 4.5 percent, and the rate stayed below 4.2 percent--even dipping down into the 2.5 percent range a couple of times. In 2018, the local unemployment rate will likely hover within the 3 percent range, depending on the region's ability to attract new entrants into the job market, as well as employer demand.
A year-over-year comparison between August 2016 and 2017 shows that employment increased by 1,400 workers, and 260 exited the unemployment rolls. Relative to the 2015-2016 comparison, this labor market growth is not spectacular and may reflect a tight job market with scarcity of employees to fill existing job openings.
Table 2 looks specifically at regional employment between 2016 and 2017 in the Lafayette MSA. During 2017, the MSA experienced a 1.3 percent uptick in employment, or nearly 1,300 jobs. The bulk of the gains came from service-producing industries, with the top two industries being professional and business services (+331 workers) and trade, transportation and utilities (+242 workers). Only two industries experienced minor declines--leisure and hospitality and information.
Since 2016, Indiana's economic growth has come from multiple areas--personal consumption, goods-producing industries, equipment, nonresidential investment and structures. As of September 2017, the top three employing industries in the Lafayette MSA were manufacturing (18 percent), educational services (18 percent), and health and social services (13 percent). These top...