The strength of the U.S. automotive industry is one of the most crucial economic drivers for northwest Ohio and southeast Michigan. But even as U.S. auto sales have peaked, experts say the near-term economic outlook is stable for the greater Toledo area.
It’s less clear how much gas is left in the tank for significant growth.
Downtown Toledo has been seeing a resurgence since ProMedica located its new headquarters there. PNC released the results of its biannual survey of small and midsize businesses in Ohio and Michigan. The survey found high optimism.
Joel Elvery, a policy economist at the Federal Reserve Bank of Cleveland, is taking a fairly measured approach to 2018, telling The Blade he isn’t expecting significant employment growth this year.
“Toledo’s still heavily dependent on the auto sector and with auto sales leveling off then that sort of means a leveling off in Toledo. It seems like a lot of the growth has been driven by the auto sector over the last couple of years,” Mr. Elvery said. “The good news on that side though is Toledo’s more directly involved with sport utility vehicles, and those sales have been more stable while car sales have been declining.”
Mr. Elvery did say the region should see some measure of a boost later this year as Fiat Chrysler Automobiles launches the new Jeep pickup truck. Officials from the company have said production is on track to start late this year and ramp up early in 2019.
Other economists, including Bill Adams at PNC Financial Services Group Inc., paint a slightly more upbeat picture.
Last month, Pittsburgh-based PNC released the results of its biannual survey of small and midsize businesses in Ohio and Michigan. The survey found high levels of optimism in both surveys.
“Whichever side of the border you’re looking on, the economic outlook for small business owners looks quite upbeat and that will pass through to increased sales and increased hiring at many small businesses in 2018,” Mr. Adams said.
PNC noted 29 percent of respondents in Michigan and 32 percent of respondents in Ohio said they expected to increase hiring over the next six months, while 40 percent of respondents in Ohio and 41 percent of respondents in Michigan said they expect to raise wages.
“On a high level, there are a lot of economic tailwinds that should benefit Toledo’s economy in 2018,” Mr. Adams said.
Most experts believe the U.S. economy will strengthen as the year goes on, stimulated in part by the tax overhaul passed late last year. PNC is forecasting national GDP growth of 2.8 percent in 2018, up from 2.3 percent in 2017. Meanwhile, the labor market is tightening, the national unemployment rate has dipped to its lowest level in nearly 20 years, and U.S. industrial growth is expected to continue rising — a situation that’s particularly good news for industry-heavy regions like ours.
“Generally we’re moving right in tandem with the U.S. economy. That’s a pretty clear direction,” said Doug Chaffin, president and chief executive officer of Monroe Bank & Trust. “Manufacturing, even though it’s a smaller segment of our local economy than it was say 20 years ago, is still a very significant part of our local economy. Our growth has really been led by the regeneration of manufacturing in the area.”
Mr. Chaffin also noted consumer confidence seems to be fairly strong, and that the area’s unemployment rate is near what would be considered full employment.
In March, Monroe County’s unemployment rate was at 4.2 percent, according to state data. For metro Toledo, the March unemployment rate was 4.5 percent, down from 5.3 percent in March, 2017, and the lowest monthly rate in nearly two years. The national rate was 3.9 percent in April.
George Mokrzan, the director of economics at Huntington Bank in Columbus, said those figures suggest people are getting back in the labor force and employers are raising wages.
“Workers are getting pulled in and I think firms more and more will likely need to keep raising wages to keep that inflow coming, and also to retain workers. In general I think that was maybe the last part of the labor market puzzle that I think is going to come together this year,” he said.
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