(Rock County, WI) The combined impacts of sustained geopolitical conflicts, coupled with both emerging and ongoing national trends, are creating mixed economic signals locally. These developments, as well as their implications, are featured in this week’s release of the Q2 2024 Rock Ready Index.

While the unemployment rates during the first six months of the year have remained relatively steady, there were some upticks during Q2 – especially during the months of April and June. Although not alarming, these incremental upward movements (if sustained) can and often do serve as early indicators of a slowing economy. As a matter of fact, some economists are predicting the national unemployment rate, which has averaged four percent in 2024, could potentially be nearly a full percentage point higher a year from now. While the statewide and local rates have remained in the low-to-mid three-percent range, that’s not the case for the region south of the Stateline Area. During Q2, the State of IL recorded an average unemployment rate of five percent and the Rockford MSA was a full percentage point above that figure. 

Nationally, job postings during the first half of 2024 averaged roughly 8.5 million – representing more than a 15% decline from last year. Meanwhile, the decline locally was in the nine-percent range on both a quarterly and annual basis. According to the most recent report from the Conference Board Employment Trends Index (ETI), the largest Q2 job gains were from employers within the healthcare, social assistance and government sectors. In addition to local healthcare openings, area employers have also been frequently (and consistently) attempting to fill warehousing/logistical, production and sales-related positions.

The upward pricing trend for homes in the Janesville-Beloit MSA continued to climb, as Q2 established a new record. With a nine-percent increase in median sale prices compared to a year ago, it’s clearly a seller’s market. While Q2 home sales were up by 12% from last year, the number of new home starts dropped by 24%. For the period of January through June 2024, the decline in new home starts locally was at less than eight percent. If the home building trajectory holds, the year-end totals for the Janesville-Beloit MSA will be in the 255-265 range or about 10% below last year’s totals. That said, a reduction in the cost of borrowing by the Federal Reserve Board during its September 2024 meeting could very well shift those figures into a higher range. Regardless if interest rates are reduced, the delivery of more housing units –representing the entire spectrum of types and prices –  is a sound community, economic and workforce development strategy. 

After seven consecutive quarters of record setting, local sales and use tax collections, consumers finally tightened their belts. While Q2’s collections were respectable at $4.7 Million, it was a six-percent decline from the prior quarter and a five-percent drop from a year ago. April and June 2024, in particular, represented some of the lowest (same month) collections reported during the last five years. Although Q2 retail sales exceeded national forecasts, the June 2024 University of Michigan’s Consumer Sentiment Index recorded its lowest rating in seven months. Furthermore, the (downward) change in that Index from this year’s previous quarter represented a nine-percent decline. Since the second half of the year historically represents the strongest collections period, the 2024 year-end estimate of $19.8 Million seems achievable. However, the rise of personal credit card debt and reduced savings rates could eventually impact local spending patterns.

While the Q2 economic development pipeline for the Janesville-Beloit MSA remained diversified, there were fewer overall projects, and they were trending smaller. Specifically, square footage requirements declined by about 23% and staffing needs dropped by roughly 38%, respectively. Additionally, projects expressed a preference to own vs. lease; a higher percentage required railroad service as either an operational and/or distribution requirement; and most reported higher than normal electrical and water utility profiles. Considering the mixed bag of Q2 economic data reported by the Conference Board’s Leading Economic Indicators and the ISM Manufacturing Purchasing Managers’ Index (PMI), the above referenced high-level declines were not surprising.

Fortunately, advanced local planning and strategic positioning have continued to serve the industrial needs of the market well. For example, the delivery of right-sized industrial buildings to facilitate activity has continued to play important roles with securing new businesses throughout Rock County. While the first and original tenant for the property located at 2401 Stateline Road left the market, another business – Power Solutions International (PSI) – has reoccupied that space. Additional information about PSI, its products and markets are the focal points of this quarter’s project profile.

The Rock Ready Index (RRI) is a quarterly economic development dashboard compiled and distributed by the Rock County Development Alliance. The RRI covers four topical areas: Workforce (Job Postings and Unemployment Rates), Real Estate (Residential, Commercial or Industrial) Trends, Sales (Tax Collection) Activities and a snapshot of the ED Pipeline’s growth and/or investment opportunities. Each Index also includes a Project Profile section, which highlights project-specific news during a given quarter. For more information, visit www.RockCountyAlliance.com.