A decline in construction industries in Missoula and Ravalli counties due to the Great Recession slowed the growth rates in those counties compared to others in the state that usually are near the top.

A new report from the University of Montana’s Bureau of Business and Economic Research has found Montana’s economy is “evening out” geographically, meaning that the more populous western counties are finally catching up with the rural eastern counties that benefited from the oil and commodity boom.

Migration trends toward cities in western Montana like Missoula mean that both income gains and consumer spending are increasing here.

“The big story is Montana’s economy is coming into balance both geographically and across industries,” said BBER director Patrick Barkey. “Three or four years ago, conditions were right for more rapid growth in rural counties – primarily eastern counties – than in the bigger cities. Now the more populous western counties are growing again as migration trends resume and income gains make consumer spending stronger.”

Barkey said that with the exception of Butte-Silver Bow County, where the economy has been hit hard by lower commodity prices, growth in western Montana has continued to improve for the past few years while the torrid growth in eastern Montana has cooled significantly.

There has been a lot of hand-wringing in Missoula over the fact that enrollment has been declining at the University of Montana – a huge economic driver here – while enrollment has been increasing significantly at Montana State University in Bozeman.

There is no question that Gallatin County is growing faster than Missoula right now, with a net migration of 1,300 last year compared to 400 for Missoula County. However, Barkey said that it’s not quite accurate to say that Bozeman is doing much better economically than Missoula.

“The story in the recession was Missoula did not fall as far as Flathead County and Gallatin County,” he explained. “A lot of times people talk about growth in those two national park gateway counties and say ‘wow, they are doing something right and we’re doing wrong’ and so forth. But you can say that or take a slightly longer perspective. Missoula had a shallower hole to dig out of.”

Barkey said that the declining enrollment and budget cuts at UM haven’t had as much of a negative impact on Missoula’s economy as some people believe.

“Of course you have UM, which has bad headlines, but there has not been all that much contraction,” he said. “It hasn’t put the brakes on the economy as much as people think.”

Barkey said the manufacturing sector in Missoula is experiencing fairly impressive growth except for the wood products industry, which is in decline.

“The weak point in Missoula is rail because Montana Rail Link is hurting, but the retail side of the economy, the stuff driven by consumer spending, whether they are residents or visitors, is pretty strong,” Barkey said.

Last year, the state as a whole added 6,000 jobs and more than $600 million in new salaries and wages. Wage growth in 2015 was around 4 percent, more than twice as strong as 2014.

“Together with falling unemployment rates and surging tax revenues, 2015 saw the Montana economy operate much closer to full capacity,” Barkey said.

The construction industry posted an 8.5 percent growth rate, and the manufacturing industry saw a 5.5 percent growth rate.

In May of this year, Missoula’ unemployment rate was at 3.1 percent, below the state average of 4.2 percent and the national average of 4.7 percent.

Barkey said Gallatin County and Flathead County are benefitting from record visitation numbers in Yellowstone and Glacier National Parks. He said Missoula County’s growth is a little bit slower and steadier. Although his office predicts that Gallatin County will be the fastest-growing county in the state until at least 2019, that doesn’t mean there isn’t a chance Missoula County catches up.

“Nobody likes being compared to Gallatin County right now, but you need to know what the starting point was,” Barkey said. “The deck gets shuffled all the time. These things don’t go on forever. Relative growth rankings move all over the place.”

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