submitted by
Uric Dufrene, Ph.D., Sanders Chair in Business, Indiana University Southeast
Job counts by the county level are out for early 2024, and the data show continued growth in payrolls for Southern Indiana (Clark, Floyd, Harrison, Scott, Washington). The latest QCEW (Quarterly Census of Employment and Wages) data show that the five counties added 1,389 jobs, compared to the prior year. This was an acceleration from the last quarter of 2023, after hitting a trough of a plus 609 in the 3rd quarter of 2023. Transportation and warehousing was the leading industry in terms of job creation, adding another 972 positions compared to the prior year. This is the second consecutive quarter that transportation and warehousing saw positive job growth. Coming out of the pandemic, transportation and warehousing job creation had surged but saw retrenchment in late 2022 and 2023. Healthcare payroll growth decelerated from the previous quarter, adding another 687 jobs. While this was a slower pace, healthcare has been the leading industry in job creation since the 4th quarter of 2022. In that quarter, accommodation and food services led all industries with an addition of 1,524 jobs.
Manufacturing saw another drop in payrolls. Manufacturing jobs have shown declines in the past four quarters, and from the first quarter of 2023 to the first quarter of 2024, payrolls are down by 855. Nationally, manufacturing has been in a slump, with the ISM Index under 50 since 2022, except for one month. An ISM under 50 signifies contraction, and this slump shows up in payroll declines across Southern Indiana. Higher interest rates have strained growth in interest rate-sensitive sectors like manufacturing. Auto sales, a key driver of manufacturing production in Indiana and Kentucky, are at historically low levels, and this is likely contributing to local manufacturing job losses.
Accommodation and food services saw another drop in payrolls, declining by 219 jobs. Accommodation and food services are now down in job growth for three consecutive quarters, reversing some of the strong gains over 2022. Even with the declines of 2023 and 2024, total payrolls are about 1,000 higher than pre-pandemic totals.
Statewide, unemployment rates for Indiana and Kentucky saw another uptick for the month of August. Indiana’s unemployment rate increased to 4.2%, compared to 3.4% the year prior. In Kentucky, the unemployment rate inched closer to 5%, with the latest reading at 4.8%. This compares to 4.2% the year prior. In both states, the number of unemployed increased. Indiana fared better with job growth, with the latest data showing an addition of 20,000 jobs state-wide. Kentucky saw a small decline in growth for August.
The Fed threw a surprise last week with a 50-basis points decline in the Fed Funds rate. This was not completely unexpected. During the prior week, sentiment had shifted, and a decline of 50 basis points became increasingly likely. Initial market reaction was muted, with the major indexes finishing down on the day. However, equity markets surged the day after, with all major indices up more than 1% each. Uncertainties remain, but the economy continues to move in the direction of a soft landing.
As we move past inflation as the economic indicator to watch, measures about the labor market and the consumer will take on increasing importance. The employment report is back to the top as the Super Bowl of economic indicators, and because the consumer drives 2/3rds of the U.S. economy, consumer-related economic indicators will be watched closely was well.
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