Northwest Indiana's economy in recent months has been in a downshift as gains earlier this year in steel production, manufacturing hours worked and other key metrics have been erased.
The NWI Coincident Index dipped in September for the second month in a row to its lowest level since late 2011. The September level of 98 is down from the 2012 peak in April, but up from September ratings in the three years prior.
Signs also point to the region heading on a choppy economic path into next year as uncertainty remains about the nation's tax and fiscal policy future.
With the help of a Lilly Sustaining Grant Fellowship, Indiana University Northwest professors Bala Arshanapalli and Donald Coffin developed the NWI Coincident Index and the NWI Leading Index to gauge the dynamics of the region's economy. The coincident index measures current conditions, and its components are steel production, local employment, national retail and food sales and average manufacturing hours worked. The leading index is used to predict whether the region's economy will expand or contract in the next six months.
"We're starting to recover, but slower than Indiana and slower than the nation as a whole," said Micah Pollak, assistant professor of economics at Indiana University Northwest.
Average manufacturing hours worked was flat in September from August and remained at its lowest level since November 2011. The American Iron and Steel Institute reported that domestic steel capacity utilization last week was at less than 70 percent, which was the lowest level of the year. However, the Commerce Department's Bureau of Economic Analysis released an early estimate Friday that U.S. gross domestic product rose at a 2 percent annual rate in the third quarter.
Despite mixed signals in data, the housing sector has shown improvement at the regional and national levels. Builders' confidence in the market for new, single family homes rose for the fifth consecutive month to the highest level on the National Association of Home Builders/Wells Fargo Housing Market Index since June 2006.
Greater Northwest Indiana Association of Realtors spokeswoman Nichole DeMario said September marked the 15th consecutive month of year-over-year increases in the sales of single family homes in an area spanning Lake, Porter, LaPorte, Newton and Jasper counties. In the period between January and late October, the median existing home selling price of $127,900 is at its highest level since 2008.
However, the lack of employment growth in Northwest Indiana is a concern since it has yet to match payroll employment gains seen in other parts of the state and nation since the recession, said Anthony Sindone, continuing lecturer in economics at Purdue University North Central.
Sindone said one reason those gains have not materialized could be because companies located here are investing in technologies so workers become more productive, which may reduce the need to hire more people.
He said the economic downturn in Europe also is affecting industries in the region that rely on business activity there. He also said a skills gap between what employers are seeking and what people in the labor market provide is other challenge.
"It's a very difficult question to answer because there's so many facets that go into determining the labor market," Sindone said.