BENTON HARBOR — Job growth has rebounded faster in Southwest Michigan than what was forecasted over the summer.
During a media roundtable session Thursday, Kinexus Group representatives broke down some of the job sectors and unemployment numbers the region has seen, six months into the COVID-19 pandemic.
Jake Gustafson, Kinexus chief operating officer, said Michigan as a whole has been performing very well, compared to what was anticipated. He said Berrien, Cass and Van Buren counties have also done well in rebounding from an astronomical unemployment rate.
“We went from mid-13 percent unemployment to a high 9 percent unemployment,” Gustafson said in reference to Berrien County.
Berrien posted a 9.9 percent unemployment rate in July, compared to a 5 percent rate in July 2019. However, this was a big rebound from when the county posted a 13.8 percent jobless rate in June.
Cass County had a 10 percent unemployment rate in July, a 3 percent drop from June, and Van Buren County posted a 8.8 percent jobless rate, a 3.8 percent reduction from June.
The Southwest Michigan region as a whole – combining all three counties – dipped below double-digits by posting a 9.6 percent unemployment rate.
Gustafson said this turnaround occurred sooner than expected.
“We thought we would be riding out double-digit unemployment through at least the end of 2020,” he said.
“If we were to put our crystal ball cap on, we believe we’ll have at least one more month of incremental growth or positive gains, and maybe sneak down to 8 percent (unemployment).”
Al Pscholka, Kinexus vice president of public relations and government affairs, said another positive to take away heading into the final leg of 2020 is that the local workforce hasn’t declined.
He said it can be harder on a region to climb out of an economic downturn if its workforce leaves. However, Kinexus has yet to see any of these indicators.
After October, Gustafson said there are still a few red flags to consider.
With the weather getting colder, he said Southwest Michigan is expected to see the usual job losses as seasonal jobs fade with the tourism season.
“This region had a great summer and a great end to Q3,” Gustafson said. “But there is still plenty of progress to go.”
Manufacturing and consumers
Strangely enough, Gustafson said there’s probably no better time to be entering the work force – especially if it’s in the manufacturing or hospitality sectors.
“The numbers are unusual there,” he said. “Manufacturing took a 10 percent hit on the labor force after COVID, and they’re still building back. But we think manufacturing is a really resilient field. What we have seen is manufacturers are starting to hire again.”
According to the Michigan Department of Technology, Management and Budget, manufacturing has been the second-hardest hit sector in Southwest Michigan in terms of total job declines – only behind leisure and hospitality.
Gustafson said consumer-spending trends were particularly eye-opening this summer, as the region saw a 20 percent growth in consumer spending across the leisure and hospitality sector.
“That’s great news. When we last spoke, we were concerned that if you looked at overall trends in previous years, we were down by about a third,” Gustafson said. “By the end of summer, that started to even out.”
Bumpy road ahead
Southwest Michigan didn’t experience a normal year of economic growth.
For this reason, Gustafson said when the slow part of the year, coming up, hits for most businesses, the lack of revenue from this past spring and early part of the summer will create a boomerang effect.
This effect will be felt hardest during the first quarter of 2021.
“Our suspicion is there will be a lot of small businesses in the retail and hospitality sector that are going to need (financial) assistance again,” he said. “This recent spike of activity is great and has helped keep them afloat as a viable business. But you can’t undo almost two quarters of no economic activity. For these folks that built up a cushion to take them through lean times, we’re going to see a second period of difficult operating times for small businesses.”