Montana’s economy showed clear signs of improvement through the first six months of the year. There has been an uptick in both labor and wages as well as increased activity in the construction industry, according to a mid-year report from the University of Montana Bureau of Business and Economic Research.
Montana income tax withholding, a solid indicator of wage and salary growth, has grown rapidly at an average annual rate of 11 percent since last November, according to the bureau’s director, Patrick Barkey. The labor market, measured by the number of Montanans receiving unemployment benefits, has also seen steady improvement, Barkey reported. By June 1, roughly 2,100 fewer people, or 18 percent, were receiving claims across the state compared to the same time last year.
Barkey said the latest available income data shows a remarkable pattern of growth in the eastern rural and farm-belt counties. The western counties have performed worse, he said, but painting an accurate picture is difficult because most of the data is almost two years old and the most recent income growth data is currently unavailable.
Barkey said there have been fragments of good news for the state’s long-suffering construction industry. After a three-year stretch that saw home prices fall by 8 percent statewide, it appears that prices bottomed out last year and have begun at least a very modest recovery, he said. Home prices were 1.3 percent higher on average in the first three months of this year compared to last year, with Missoula (2 percent), non-metro Montana (1.5 percent) and Billings (0.7 percent) all registering price gains.
But Barkey emphasized that not everything is rosy, even for the state’s stronger industries and counties. A lack of rain this spring is hampering the summer wheat crop and domestic natural gas prices have weakened the domestic market for Montana’s coal. This has brought new gas drilling to a halt, he wrote. Even though crude oil prices have remained reasonably high, state producers continue to be penalized by a lack of transport capacity, which has caused the discount Montana oil receives relative to the West Texas Intermediate benchmark price to approach $20 a barrel, Barkey said.
Barkey said the biggest concern in the state economy continues to be the specter of another national economic downturn, particularly if that event is triggered by a disorderly meltdown of the European Union. The U.S. economy’s recent 2 percent growth rate looms overhead, leaving much to be concerned about, Barkey said. At the same time, the European recession already has contributed to a marked slowing of Asian economic growth that should cause concern for Montana exporters and commodity producers, Barkey wrote.
“With at least some signs of life in long-depressed housing and construction markets, the same funk that has descended over financial markets and places like Europe is harder to find here,” he said. “Yet Montanans still should be concerned over the state of the global economy.”
For more information visit www.bber.umt.edu
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