5 factors driving Michigan's economy higher in 2016

Michigan's economy is definitely on the upswing and the new year promises more of the same with the state's unemployment rate on a downward trajectory, auto sales on a tear and the happy surprise of below-$2-a-gallon gasoline putting extra cash in pockets and priming sales of highly profitable SUVs and light trucks.

To be sure, there are always unexpected obstacles to good economic growth, but the stars and dollar signs seem to be lining up for an upbeat 2016. State officials, analysts and corporate leaders interviewed by the Free Press point to positive growth and job creation for 2016.

■ Gas prices will power additional spending and jobs.

With gas prices below $2 a gallon at some stations, consumer confidence is high, and that’s great news for businesses. The Detroit Three automakers, whose product portfolios are still weighted more heavily toward highly profitable bigger vehicles, are expected to benefit as shoppers rush to the showroom.

■ Tourism will fuel job growth.

Michigan’s hospitality sector is surging. Hotels, resorts and tourist destinations, particularly in the northern part of the state, are flourishing. The leisure and hospitality sector is expected to add about 9,000 jobs in 2016, according to the U-M forecast.

■ Manufacturers won’t add many jobs.

The auto industry can handle most of the demand for new cars with the plants that it already has. Don’t expect new assembly plants in Michigan or many new shifts. With U.S. auto sales potentially reaching the 17 million mark in 2016, auto factory employment may not get much higher in Michigan.

The manufacturing sector is expected to add only about 6,000 jobs in 2016. By comparison, it added 77,000 manufacturing jobs from 2011-13.

■ Investors will seek out downtown Detroit.

Economic development officials report renewed interest from prospective investors in downtown Detroit following the consensual resolution of the city’s Chapter 9 bankruptcy.

With a plan in place to overhaul city services and drastically reduce blight, Detroit has greater appeal to investors. But most of the investment will concentrate in the central business district, not reaching into the city’s poor neighborhoods.

■ The temporary staffing sector will continue to grow.

Taken together, temporary jobs and contract positions represented an estimated 36% of Michigan’s job growth since 2009, according to federal figures. Employers are leaning heavily on temporary jobs to create flexible workforces, making it easier for them to shed jobs as the economy shifts. Watch for companies to add more temp jobs in 2016.