CLARKSBURG — West Virginia is seeing its best economic growth since 2014, according to the Mountain State Business Index.
The index, which gives a month-by-month snapshot of the state’s economy, recorded a 0.2 percent increase for September. Though 0.2 percent may seem small, it is significant for the state’s economy.
“The idea is that 0.2 percent is not negative, and it’s actually a fairly healthy rate of improvement,” said Brian Lego, an assistant research professor with West Virginia University’s Bureau of Business and Economic Research, which compiles the index.
The September increase is the most growth the state’s economy has seen since the energy industry began its recent downward spiral.
“The economy went through a pretty steep downturn and recession while the rest of the nation was doing some relative economic expansion,” Lego said. “We had the coal industry taking those dives over the course of 2015 and the first half of this year, and then also natural gas suffering greatly.”
But Lego said other business sectors have been doing well enough to help the state’s overall economy bounce back.
“If you look at things more holistically, you can make a better call to whether the overall state economy is actually in a recession or not, or in this case if it’s emerging from that,” he said. “Sometime over the summer, the recession ended, and we’re starting to come out of that period and are in the early stages of recovery.”
Christine Risch, director of resource and energy economics for the Marshall University’s Center for Business and Economic Research, said growth has been seen in leisure and hospitality, accommodation and food service and arts and recreation, which indicates a strengthening tourism industry.
“Several high-wage goods-producing industries, like mining and manufacturing, as well as transportation and c
onstruction, declined during this time,” Risch said. “These losses were somewhat offset by employment growth in health care, an industry which continues to have some of the largest employment growth.”
While that may seem like good news, Risch said it is concerning for the long term.
“Total employment did rise in the last year, but most growth has been in state and local government and lower-wage services industries, while total private-sector employment has declined,” she said. “This trend is not sustainable long-term.”
The good news is that a slight resurgence of the state’s energy industry, particularly natural gas, has and will continue to contribute to the economy’s recovery.
“One of the things that we’ve seen is that production has held up fairly well, and there are some reasons that producers have had to keep production up,” Lego said. “Part of that is because they have debt and they have to pay debt. They’ve continued to produce even though the prices are low, but they’ve been able to offset the fact that prices are low and continue to expand production.”’
Despite a surge of layoffs in the energy industry, Lego said unemployment insurance claims also have started to fall off.
“So you may not have seen a dramatic increase in hiring in other industries, but you haven’t seen further upswing in companies laying people off,” he said. “That’s a good thing. That suggests that the labor market, while not being superbly healthy, it’s not getting worse.”
Lego expects the natural gas industry to continue improving as the infrastructure starts to catch up to all of the supply growth the state has had in recent years.
“We’ll be able to get the gas where it’s needed instead of stranded here in Northern West Virginia,” he said. “There will be a market, so you’ll see prices start to improve. You’ll see some more exploration, so companies will start to hire people back.”
The coal industry also may see some improvement, Lego said.
“You’ll see further stability start to take hold,” he said. “We won’t see massive growth, but things will start to at least stabilize, and we’ll see some of the more productive mines here in the northern part of the state probably begin to hire at least some of their people back.”
However, Risch said it will take time before the high wage jobs lost in heavy industrials are recovered.
“There are still opportunities for goods-producing industries to grow in West Virginia,” she said. “This is already happening in industries like consumer products, paper products, fabricated metals and medical instruments. Hopefully, the investment associated with that kind of expansion, along with expansion of the tourism industry as we are seeing right now, will lessen the impact of this forced diversification.”
Economic development opportunities in these industries may be the most likely to replace lost industrial jobs and further work to rebound the state’s economy.
“I think when you look in terms of rolling the calendar forward, it looks like things are going to be moderately stronger than they are,” Lego said. “Relative to the U.S., we won’t be as strong, but we will likely be in a better state than we are now.”
Staff writer Brittany Murray can be reached at (304) 626-1439 or by email at firstname.lastname@example.org. Follow @BMurrayET on Twitter.