The senior economist at BMO Capital Markets believes “the corner has been turned” in Indiana's economic recovery. Robert Kavcic says nonfarm payrolls in the state are back to pre-recession levels, which he calls a “rare feat” in a manufacturing-heavy area. The organization's bi-annual U.S. State Monitor Report predicts “solid growth” for the state's Gross Domestic Product and employment. Kavcic says an improving housing market and the scaling back of government spending cuts are helping to fuel the growth.
February 4, 2014
Indianapolis, Ind. – Economic growth remains solid in Indiana as the auto sector continues to expand and job growth continues to recover, according to the bi-annual U.S. State Monitor Report from BMO Economics.
Real GDP should expand 2.9 percent in 2014 after expected 2.8 percent growth in 2013, above average for the country.
“There are lots of reasons to be optimistic about the Indiana economy,” said Tim Massey, Regional President, Indiana, BMO Harris Bank. “While we have not been immune to the difficulties of the recession, we are enjoying a resurgence that bodes well for future business growth and continued economic improvement.”
Employment continues to recover at a solid pace in Indiana, up 1.8 percent year-over-year in December, outpacing the 1.7 percent year-over-year gain recorded nationally.
“Nonfarm payrolls in the state are now back to pre-recession levels,” said Robert Kavcic, Senior Economist, BMO Capital Markets. “This is a rare feat in this manufacturing-heavy region of the country.”
Auto production gained 7.8 percent in the fourth quarter of 2013 over the previous year, and this has led to direct and indirect employment gains.
“A resurgent auto sector has clearly helped; for example, Toyota recently announced 600 new jobs due to increased SUV production,” said Mr. Kavcic. “Even growth in the service sector, particularly in transportation and warehousing, is likely auto-related.”
With strong job growth, the unemployment rate has fallen sharply to 7.3 percent in November 2013, down more than a full percentage point from a year earlier.
Home prices are recovering, with the Federal Housing Finance Agency (FHFA) index up 1.2 percent in the third quarter of 2013 over the previous year, but they are still well below peak levels. The foreclosure rate has fallen sharply in the past year, down 1.5 percentage points, which is close to the national average of 3.2 percent. The healthier backdrop has boosted construction activity, with housing starts averaging more than 17,000 units in the twelve months through November, up 18 percent from the same period a year ago.
To view a full copy of the report, visit www.bmocm.com/economics.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris Bank® is a trade name used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $537 billion in assets (as of October 31, 2013).
Source: BMO Harris Bank