CHICAGO, IL--(Marketwired - Aug 14, 2014) -
- Exports to pick up from soft patch
- Fiscal challenges being addressed with pension reform, although challenges remain
- Jobless rate is declining and recently reached lowest level since October 2008
Despite the Illinois economy underperforming in 2013, real GDP in the State is expected to pick up next year, accelerating from 1.7 percent this year to 2.9 percent in 2015, according to the bi-annual U.S. State Monitor Report from BMO Economics. The slow growth last year was largely attributed to declines in construction as well as government spending and sluggishness in a number of service sectors. Severe weather also had an impact.
"While Illinois' economy has been slow out of the gate, we do expect improvements through 2014 and into 2015. This upward trend will be led by improved business confidence and investment supporting the manufacturing sector and continued strength in the housing market recovery," said Robert Kavcic, Senior Economist, BMO Capital Markets.
Employment in recent months has seen weaker numbers, with non-farm payrolls up only 0.5 percent year-over-year, compared to 1.8 percent year-over-year at the national level.
"While business owners in Illinois have expressed some concerns about economic conditions, there is still an underlying business confidence that the economic recovery continues to head in a positive direction, and that it's a recovery this is being led by business owners, large and small, throughout the state," said Dave Casper, Executive Vice President and Head, Commercial Banking, BMO Harris Bank.
"The dip in manufacturing jobs has played a notable part in Illinois' lagging employment numbers. However, the good news is that service-sector employment topped pre-recession levels in December, before starting to fade more recently," said Mr. Kavcic. "The state jobless rate fell to 7.1 percent in June, which marks the lowest level since October 2008."
The housing market continues to show signs of recovery, despite being slower to gain traction compared to the harder-hit states. The vacancy rate, at 3.0 percent, is above the national average but falling. Home prices are rising, pushed up by fewer foreclosures and a gradual decline in supply. According to the most recent Case-Shiller numbers, Chicago home prices are up more than 8 percent year-over-year. The factory sector was marked by a soft patch for most of 2012 and 2013, but is showing signs of positive momentum.
"Business confidence remains subdued, partly because of fiscal uncertainty in the state, with pension reform at the heart of the issue," said Mr. Kavcic. "Recently steps have been taken to address the pension shortfall, including a reduction in cost-of-living increases, but challenges still remain."
To view a full copy of the report, visit www.bmocm.com/economics
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $582 billion in assets (as of April 30, 2014).