An economic forecast from PNC Financial indicates that Delaware is recovering from a tough winter that stalled job growth.
This comes after employment growth ran above the national average during most of 2013.
The report notes that the total employment remains 2 percent below the pre-recession peak. However, the report sees hopeful signs for manufacturing that include the purchase of the Wilmington Fisker plant by Chinese parts maker Wanxiang and a jobless rate falling below 6 percent.
“Median household income in Delaware continues to recover from the sharp hit it took during the Great Recession, with the loss of many well-paying jobs in auto manufacturing, finance and constructio,” the report stated.
The reported noted that in the near term local income growth will lag behind the national rate given soft job growth in key industries like finance, construction and manufacturing and the state’s high share of retirees.
The report indicated that disposable income suffered in early 2013 with increases in personal income and payroll taxes, weighing on consumer spending.
Longer term, Delaware’s concentration in well-paying finance and professional/business services will support above- average incomes and stronger consumer spending. The bad weather also hit the housing market, although pent up demand, improving access to credit and affordable housing prices are expected to result in a better performance in coming months. Delaware’s housing market bottomed in 2012, a year or so later than many other areas.
The PNC report indicates home sale prices will increase, although activity could be slowed by higher interest rates. “Homebuilding is also improving, with double-digit gains expected in both single-family and apartment construction in 2014. There was less overbuilding in Delaware compared to the nation as a whole, and a pickup in population growth will spur improvement in homebuilding and construction employment,” the PNC report indicated.
Another positive sign, according to the report is a likely resumption in population growth to a rate around the national average in coming years.
“Affordable housing, lower taxes, and Delaware’s location in the middle of the populous Northeast Corridor will attract workers and retirees from Pennsylvania, New Jersey and Maryland. In turn, population gains will support homebuilding and consumer-oriented industries, including healthcare. However, the dependence on retirees for population growth will limit labor force gains and income growth,” the report stated. “Although population growth and in-migration will not return to the rates experienced during the boom years, they will pick up thanks to the state’s low taxes, affordable housing and advantageous location,” the report stated. “ Upside potential to the long-run forecast comes from construction of improved rail links with Philadelphia, which could lead to more commuters moving to Delaware to take advantage of the state’s less expensive housing and low taxes.”
