Northwest Indiana's economy continued to idle in August, with softness in employment and average hours worked continuing to drag on business activity.
The local economy has not been able to get into gear this year, with the NWI Coincident Index yielding a reading of 99 in August. That is the lowest reading this year, with the barometer of current local economic activity peaking at 102 in March and April.
The national economic indicators also show an economy that is largely idling, and that is why the Federal Reserve two weeks ago announced it would launch another round of stimulus known as QE3, according to Bala Arshanapalli, a professor of finance at Indiana University Northwest and one of the NWI Index's creators.
Called quantitative easing, it is the third round of stimulus announced by the Federal Reserve. Arshanapalli said he fears the benefits of that stimulus may be limited to investors.
"The stock market might do better, but does it mean the common person in the street will be any better off than they were six months ago? I worry about that," he said.
The NWI Leading Index, a forecast of how the local economy will be doing six months from now, could not muster a third straight month of increase, with that index falling 0.71 percent in August. It had risen in both July and June. Three straight months of increase would indicate the area is in for an economic recovery.
The only bright spot in the NWI Leading Index was the housing market, with the Housing Market Index rising for the fourth straight month.
But two purchasing manager's indexes that are part of the overall reading fell, as did the Dow Jones Transportation Index. The U.S. Index of Leading Economic Indicators also fell a tick, just 0.1 percent.
The Northwest Indiana Index was developed this year by Arshanapalli and IUN emeritus professor of economics Donald Coffin. It is published monthly in The Times and on nwi.com .
It's first component, the NWI Coincident Index, shows the state of Northwest Indiana's economy at the current time. Its four inputs are steel production, local employment, national retail and food sales, and manufacturing hours worked.
The second part, the NWI Leading Index, is a forecast of how the local economy is likely to be performing six months from now. It has a broader range of components than the coincident index and is made up of a number of traditional prognosticators such as interest rate spreads and the national Purchasing Managers' Index.
Both local and national indicators show that a jobs recovery in the region will be slow in coming.
Region employment declined by 400 jobs in August, which was a relatively small decline in one of the NWI Coincident Index's most volatile components. Another part of the index, average hours worked nationally, fell to 41.5 hours.
Despite the weak job numbers, there are job openings in the region, according Linda Woloshansky, CEO of the Center of Workforce Innvoations. Some of those openings are created by aging baby boomers and some by new companies moving into the region, she said.
"There will continue to be job openings, because we will see more retirees and more companies coming into the region," Woloshanky said. "We have Fronius coming. Modern Forge is coming. So there are companies coming in and things will be happening."
Revised numbers on U.S. Gross Domestic Product released by the U.S. Department of Commerce on Thursday show the national economy is growing, but not fast enough to produce a drop in unemployment, which currently stands at 8.1 percent nationally.
The Commerce Department reported the overall economy grew at an annual rate of 1.3 percent in the spring, down from its previous estimate of 1.7 percent growth. The big revision reflected that the government slashed its estimate of crop production by $12 billion.
The 1.3 percent growth in the spring followed a sluggish 2 percent growth rate in the first quarter.