Experts forecast sluggish economic growth

Hoosiers should view their state's economy with tempered optimism over the next year, say some experts, who \npredict little economic growth but steady performance in \nIndiana. \nIndiana can anticipate adding 20,000 to 25,000 new jobs, an increase that lags behind the national average, according to an annual economic outlook released earlier this month by the Kelley School of Business. \nBut Indiana should continue to post a significant gain from 2005, which saw an increase of only 13,000 jobs, or less than half of 1 percent, the outlook report said. The Indiana economy grew by 24,800 jobs this year, according to Bureau of Labor Statistics data. \nIndiana fares better in terms of growth than many of its Midwest neighbors, such as Michigan and Ohio. Still, employment levels should stay beneath the national average because of turmoil in the automotive industry and a declining housing sector, according to a report from the Indiana Business Research Center. \nIndiana relies heavily on the manufacturing sector, and the housing bubble has burst, even though home prices hold steady with no signs of decline, said Jerry Conover, director of the Indiana Business Research Center.\n"In Indiana, the weakening of the housing market will continue but to a lesser extent," said Conover.\nDespite a less robust housing market, Conover said Indiana can expect an uptick in construction jobs, a market that remains strong due to large construction projects in the state, including a new Honda plant in Greensburg, Ind., and the expansion of a BP refinery in Whiting, Ind.\nConover also stressed a mixed employment outlook. Overall job gains should put only a slight dent in unemployment, and potential losses in manufacturing jobs threaten to offset any gains made in the construction sector, he said.\nThe struggling manufacturing sector accounts for a major chunk of the Indiana gross state product, which slipped to 16th nationwide last year. But in the long run, Indiana might see a gradual increase in manufacturing jobs because manufacturing employment has been increasing in Indiana since last August, according to the report.\nIU economics professor Bill Witte said this projection stands on shaky economic ground because the slowdown reflects a trend dating long before the automotive industry's recent difficulties. But not all these jobs are being shipped overseas to cheaper labor markets, he said.\n"It's losing jobs not just to outsourcing but to increased productivity," Witte said. "Increased output requires fewer workers."\nHoosiers can look forward to moderate growth in the professional and business services, Conover said. The health and education sectors show particular strength.\nAccording the Indiana Business Center's findings, those industries tallied an additional 4,000 jobs this year, nearly keeping pace with the state's current highest-growth industry, leisure and hospitality.\nThe employment increase in health and education was half the national average of 2.2 percent, according to the Kelley School's annual economic outlook.\n"Indiana has not grown as rapidly as the national economy," Witte said. "It's the pattern we've seen evolve over the last few years"