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Missoula’s industries are growing for the most part, but that growth will be slow, experts told about 400 people who attended Outlook 2014 on Friday.

While it’s not a particularly shocking forecast, it’s still good news, said Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research.

“It’s a pretty exciting forecast because things are getting better,” Barkey said.

Friday’s half-day economic outlook seminar was the 39th annual event presented by the BBER. Missoula was the third stop on a nine-city tour of the state.

Challenges for the area include millions of dollars worth of anticipated cuts at the University of Montana, and government workforces that are expected to remain stable but not necessarily grow. Layoffs and cuts at Missoula’s hospitals will also present obstacles to growth.

Health care overall could be impacted by the Affordable Care Act, but several trends emerged before the law was passed, said Bryce Ward, director of health care research at BBER.

Health care spending has slowed, Ward said, but the trend began before “Obamacare” entered the picture.

While it’s unclear what caused the slowdown, it’s likely a combination of factors, including that people had to contribute more money to their insurance plans and deductibles during a recession – when they had less money to spend overall, he said.

Although spending has slowed, costs are still high and access not ideal, Ward said.

A BBER study shows that more than 50 percent of uninsured Montanans are in fair or poor health, as opposed to about 20 percent of uninsured residents who are in excellent health. Seventy-six percent of those who are uninsured are so involuntarily, primarily because of low-wage jobs.

“Everything comes back to that cost question,” Ward said, adding that the ACA attacks the lack of access but doesn’t magically fix the cost of care.

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Energy continues to be the biggest story for the state’s economy, Barkey said.

Of the more than 1 million barrels of crude oil produced in the Bakken fields, about 81,000 of those come from Montana. And that production was up 21 percent in early 2013, said Terry Johnson, director of BBER’s Natural Resource and Energy Research Program.

However, pipeline infrastructure has been lacking. With increased rail transportation, the price difference between oil coming out of Montana and the West Texas Intermediate price averaged about $5 a barrel in the fall of 2013, versus about $12 in early 2012, Johnson said.

Increases in oil production are likely to continue, Johnson said, while coal is expected to stay stable despite a 10 percent increase in production over the same period. Natural gas production is expected to increase, in part because of environmental issues with coal.

Energy growth is expected to keep the transportation sector growing in Missoula County, as more resources are transported via rail.

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Overall, Missoula County residents should expect a 2.7 percent increase this year in nonfarm labor earnings, Barkey said.

The state will be up a projected 3.1 percent in 2014 and have similar annual growth through 2017, Barkey said.

One of the areas experiencing growth will be manufacturing, which saw 3.5 percent growth in 2013, said Todd Morgan, director of forest industry research for BBER.

Within manufacturing, the forest products sector also is expected to see growth, although it won’t reach historic levels, Morgan said.

Only 6 percent of respondents to a Montana manufacturers survey said they expect a worse year overall for forest products than last, compared with the 37 percent who are expecting a better year. No respondents said they expect any negative changes in employment.

Prices may be volatile due to competition, and timber availability from private and public lands will be a major constraint for Montana mills, Morgan said.

The manufacturing employment outlook is positive, but 18 percent of respondents said they see a shortage of skilled workers, mainly in the food and beverage sector.

In Missoula, Ravalli and Mineral counties, 11 percent of respondents said manufacturing will be worse than last year, but 50 percent said they expect a better year and 39 percent said they foresee a year similar to last year.

One of the things that will drive growth in forest products is an increase in construction.

People are willing to pay premiums for new houses, said Scott Rickard, who serves as director for the Center for Applied Economic Research at Montana State University-Billings.

Building permits are up statewide, but there has not been a strong return to spec market houses, he said.

Median prices for Missoula County homes is up, but still 3 percent lower than 2008 levels, he said. Prices continued an upward trend in 2013, and Flathead County median prices also rose, while they dipped in Lake County.

Sales, construction, median prices and underlying values are expected to continue their rise, he said. “I’m not seeing any signs that this is suddenly going to peter out.”

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Despite dips in grain prices, the agriculture sector is expected to have another strong year, especially with high cattle prices.

Tourism also is expected to have a good year and saw increases in 2013, including a 20 percent hike in nonresident spending to $162 per day in the third quarter, said Norma Nickerson, director of the UM Institute for Tourism and Recreation Research.

Nonresident tourists brought $3.5 billion into the Montana economy, which directly and indirectly helped support 44,000 jobs, Nickerson said.

Thirty-seven percent of all spending in the Glacier Country tourism region is spent in Missoula County, she added.

Montanans also contributed $210 million to the economy on outdoor recreation trips, Nickerson said.

Despite the government shutdown causing a 64 percent nosedive in park visitation last October, Glacier National Park visitors increased by 1.3 percent for the year. Yellowstone visitors were down 7.2 percent, but at least part of that could be due to the park’s switch to counting individual people instead of cars, Nickerson said.

For the fourth year in a row, Bozeman’s airport was the busiest in the state, but Missoula’s deboardings from 2012-13 were down 1 percent. Butte saw a 32 percent increase in deboardings. Overall, airport deboardings were down 2 percent in the state. Part of that decrease could be because the Billings airport closed for six consecutive weekends in July and August and saw an 11 percent decrease in deboardings, she said.

International tourist numbers are expected to increase over the year, as long as the dollar remains weaker than other currencies, she added.

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Another area that could see strong growth this year is commercial development, said James Grunke, president/CEO of the Missoula Economic Partnership.

About 500 jobs are expected to be created with the completion of the South Crossing shopping center near the intersection of Brooks and Reserve streets, Grunke said.

Additionally, the university has approved more than $51 million in new construction projects, which includes Missoula College, and buildings are expected to begin going up in the Old Sawmill District.

Startup companies, including Rocky Mountain Biologicals Inc. and FilmSpur, and different programs that support them, such as MonTEC and the Blackstone LaunchPad, will have prominent roles in growth, Grunke said.

“These are the things that are going to create entrepreneurship to move our community forward,” he said.

Presentations made at Outlook 2014 will be available online by mid- to late-February at bber.umt.edu.

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