Recent indicators point to stronger economic growth in Wisconsin for the coming year, following moderate expansion in 2013, according to the bi-annual U.S. State Monitor Report from BMO Economics.
Real gross domestic product in Wisconsin will increase 2.3 percent this year – up from an expected 1.2 percent pace in 2013 – bolstered by factory activity and modest export growth, according to the forecast.
“This positive economic forecast is a reflection of the strength of Wisconsin-based businesses located throughout the state, as well as the confidence that business owners have in the prospects for their own individual businesses,” said Jeff Ticknor, managing director and head of commercial banking, Wisconsin, BMO Harris Bank.
The labor market has improved in recent months, with employment up 1.6 percent year-over-year in December, the fastest increase in more than eight years, the report stated.
“In particular, manufacturing and leisure and hospitality jobs have experienced a major comeback, the latter surging 5 percent in the last year. Manufacturing employment is at its highest level since 2009,” said Robert Kavcic, senior economist, BMO Capital Markets. “Construction and financial-sector employment are still lagging, but overall the unemployment rate is at its lowest since late 2008 and should dip below 6 percent this year.”
The housing market in Wisconsin did not experience the same downturn as other harder-hit states, so does not need to recuperate to the same extent. Prices during the recession fell 10 percent peak-to-trough, compared with the national average of 18 percent. The vacancy rate is low on the spectrum at 1.3 percent. In Milwaukee, the months’ supply of homes for sale sits below 5 percent, the lowest level since 2005.
“Exports cooled down in the past year – mostly attributable to a slowdown in machinery shipments – but that is expected to change. Stronger global growth this year will help support exports, and factory activity too is on the rise. The Milwaukee PMI (Purchasing Managers Index) has risen steadily since mid-2013,” said Kavcic. “The economy will also get a boost from personal income tax cuts, enacted last year which will bring in an estimated $328 million to the Wisconsin economy in 2014.”
