Amy Watson, State Economist

As of the beginning of September, the Montana economy continues its strong expansion. Employment is at an all-time high, unemployment rates have reached record lows, and economic production continues to grow at a steady pace despite tight labor markets and inflationary headwinds. Extraordinary job growth and accelerated wage growth have strengthen Montana households and supported continued economic expansion throughout the state. Labor market highlights include:

• In 2022, Montana added 20,900 jobs – the most of any year in state history. Montana ranked 8th among states for employment growth in 2022, posting 3.9% growth.

• The unemployment rate fell to a record-low 2.3% the first quarter of 2023, with the number of unemployed Montanans also hitting a record low of nearly 13,000.

• Tight labor market conditions persisted in 2022, with nearly three job openings for every one unemployed person. The state’s aging population and increased retirements has driven long run declines in labor force participation, further exacerbating the state’s workforce shortage. The number of retirees in the state surpassed 200,000 in 2022.

• Record low unemployment rates have increased competition for workers and driven up wages. The average wage for Montana workers rose by over 6% in 2022, the 4th fastest among states. The average wage earned by Montana workers reached $54,525 in 2022. Inflation outpaced wage growth in 2022, resulting in real average wage declines of 1.6%.

• Montana’s labor force has never been larger, with over 575,000 Montanans working or seeking work. Strong wage growth and a significant uptick in in-migration has helped increase the available pool of workers for Montana businesses. Montana ranks 2nd in the nation for the largest percentage of in-migration from 2020 to 2022. Over 40,000 more people moved to the state than left from 2020 to 2022, translating to 3.8% of the Montana’s population. About 65% of people who recently moved to the state are either employed or actively seeking work, which is higher than the labor force participation rate of existing residents.

The strength of Montana’s labor market help support economic growth in the state. Business formation reached a record high, which propelled economic output to new heights. Continued growth in the Montana economy translated to more income for Montana households. Strong household balance sheets helped offset the impact of rising prices, allowing Montanans to continue spending to support the overall economy.

• The Montana economy grew by 1.6% in 2022, as measured by real gross domestic product. The economy contracted slightly during the first two quarters of 2022, as inflation and the conflict in Ukraine were a drag on economic growth. However, growth turned positive in the second half of the year as inflation moderated. The first quarter of 2023 shows continued economic strength, growing by 6% and ranking 5th in the nation for fastest growth.

• Business formation in Montana reached a record high in 2022, with new business applications

exceeding 20,000 in 2022. Montana boasts the 3rd highest rate of business ownership among states.

• Personal income grew by 3.1% in 2022 – ranking Montana 19th in the nation for fastest personal income growth. On a per capita basis, average income rose to $57,719 in 2022 – ranking 29th  highest among states.

• One of the primary headwinds to economic growth in Montana and across the U.S. during 2022 was inflation. Inflation reached a forty-year high of 9.1% in June of 2022. Since then, changes in monetary policy and easing of supply chain bottlenecks have caused inflation to moderate. As of June 2023, inflation has fallen to 3% over-the-year.

• Montana ranks 8th among states for fastest home price appreciation since 2020. The typical home value in Montana averaged $440,000 in the first quarter of 2023, up 51% from three years earlier.

Montana’s economy has shown strong expansion over the last few years. Although rising prices and tight labor markets have dampened economic enthusiasm, Montana’s labor market has continued to grow.

Workers continue to enjoy plentiful opportunities for high-wage jobs and businesses continue to thrive. Through productivity improvements, investments in worker training, and tapping into underutilized labor sources, Montana’s economy will continue to flourish