According to last year’s forecast, Louisville metro payrolls would eliminate employment losses by the end of 2021. The appearance of the unknown delta variation, record-breaking job opportunities, and supply chain issues, however, managed to postpone last year’s generally upbeat prediction. Despite these challenges, the Louisville metro area appears to be on track to recover almost all job losses by the end of the year. Payroll growth in the Louisville metro area is expected to be between 2% and 3% in 2022. Employers are able to successfully fill job opportunities, which is critical to this outlook. Manufacturing expansion, strong consumer demand, and a growing leisure and hospitality industry all contribute to this positive outlook.
Jobs in the Louisville metro area
The Louisville metro added around 17,500 jobs year-to-date in September 2021.
If the metro region continues to grow at this rate in the fourth quarter of 2021, total job growth for the year will be at 23,000, putting the percentage gain at 3.6 percent. National economic growth is predicted to slow, resulting in a slowdown in Louisville payroll growth beginning in 2021. As a result, payroll growth in the Louisville metro area is expected to be in the range of 2% to 3% in 2022.
Manufacturers can anticipate a robust year. The inventory-to-sales ratio is low across the country. New orders and unfilled orders are both at an all-time high. Manufacturing will be able to maintain output due to a combination of new and unfulfilled orders as well as a low inventory-to-sales ratio. Materials shortages and supply chain issues that have plagued manufacturers in recent months should improve, albeit they will not be completely rectified. This will help to stimulate industry in the area. Manufacturing payroll growth will also be supported by expected improvements in labor market participation and an expanding labor force.
Manufacturers in the Louisville area added over 2,300 jobs year over year on September 2 and could expect to add more next year.
Hospitality And Recreation
Due to the introduction of the delta variation, the much-anticipated rise in leisure and hospitality met a few speed bumps. As the economy advances through the delta, consumer spending on services should rebound, with growth in both leisure and business travel. As a result, Louisville’s convention activity should continue to improve, boosting leisure and hospitality jobs. Some firms will likely make remote work arrangements permanent, although in-office activities should also expand in 2022. A return to the office will boost leisure and hospitality jobs, especially in downtown Louisville. 6,700 new employment were created in the leisure and hospitality industry (September year over year). While matching this level of increase next year may be challenging, we should expect more gains in leisure and hospitality jobs.
Warehousing And Transportation
In 2021, transportation and warehousing was one of the fastest-growing employment sectors in the Louisville metro area. Despite labor shortages, employers gained 3,800 positions in September compared to September last year. As manufacturers and retailers try to alleviate supply chain difficulties and meet consumer demand, truck drivers and warehouse workers are in high demand. Strong hiring is expected to continue through 2022, with transportation and warehousing expected to be one of the leading sectors in terms of payroll growth, suitable for Louisville’s logistics and warehousing hub.
Retail commerce added 2,200 jobs to the economy (September year over year).
Although this forecast predicts a healthy year for Louisville retail, it also predicts that the trend away from goods and toward services will continue. The consumer is still positioned for retail activity, notwithstanding the change from goods to services expenditure. Household balance sheets are in good shape, and net worth is at an all-time high. Savings rates are still high, and the consumer debt service ratio is still lower than it was before the epidemic. While recent retail sales growth has been the biggest on record, current supply chain issues will help to boost future goods buying. Auto sales, for example, have been low in 2021 compared to previous years. This is due to a lack of supply rather than a lack of demand. Demand will be sustained as we move through the supply chain concerns that have been affecting auto sales.
Indiana’s southernmost region
Southern Indiana is making steady headway in reversing the devastating job losses that happened during the economic recession. Payrolls were down by 2,600 positions in the first quarter of 2021 compared to the previous year. This is a significant improvement over the second-quarter 2020 deficit, which was on the verge of losing 12,000 jobs. In Southern Indiana, average weekly wages increased significantly. Since 2001, the fourth quarter of 2020 has seen the largest gains in average weekly salaries. This increase in average weekly earnings is expected to continue, emphasizing the significance of cost control in Southern Indiana businesses. Productivity will be critical in maintaining competitiveness. We can anticipate a higher reliance on productivity-enhancing investments and a bigger need for them. Southern Indiana will continue to grow through 2022, with payroll gains expected to exceed levels seen prior to the COVID-19 epidemic.
Summary and Prognosis
Another year of healthy payroll growth is expected in the Louisville metro area. Overall payroll growth will be supported by a rising labor force and the mitigation of supply chain disruptions. Consumer spending will be supported by strong household balance sheets, creating demand for transportation and warehousing. In comparison to 2021, spending on services will increase, which will benefit leisure and hospitality businesses. Manufacturing is expected to rise even more in 2022 as it works through order backlogs. Automotive sales will be strong in comparison to 2021, providing another boost to Louisville-area manufacturers.
The outlook for the Louisville metro economy is generally positive.