West Virginia sees slight improvement in business index

By Joe Dyton | Oct 12, 2016

MORGANTOWN -- A slight uptick in the Mountain State Business Index (MSBI) could signal a resurgence of economic growth in West Virginia.

The MSBI’s 0.2 percent increase in September is its best since late 2014. The index has posted month-to-month gains for four out of the last six months.

While there are signs of economic improvement in West Virginia, it’s important to remember that these are slight improvements, according to John Deskins, director of the Bureau of Business and Economic Research at West Virginia University.

“I would be careful about using the word, ‘optimism’,” Deskins told The West Virginia Record. “The state has suffered a lot and the index and many other economic indicators show that. But over the last six months, the index has flattened out, but the growth has been very modest.

"Really what we’ve seen in a flattening out, not a recovery. (But) there’s no doubt that the recession ending is a good thing.”

One of the reasons for the slight economic improvement is that the energy industries are starting to pick up — especially coal, which drives much of the state’s economy. The state has seen its coal quantity drop from 150 million tons to 70 to 75 million tons, Deskins said. However, it looks like the decrease in the state’s biggest resource is concluding he said.

“The drop in coal seems to be ending,” Deskins said. “We actually have seen a few signs of improvement in coal. The prices have started to improve; that’s a good thing. We think the production has quit dropping; that is the biggest reason the recession has ended.”

 The improvement in coal’s production couldn’t be coming at a better time for the state, he said. 

"When coal is lacking, it impacts everything," he said. 

West Virginia has lost 17,000 jobs since the beginning of 2012 — most of which are directly connected to coal. It’s not just the coal miners who are affected, however. When coal jobs are lost, it spills over into the rest of the economy. The demand at the local grocery store and entertainment venues decreases, too. There’s also the financial impact, as the loss of tax revenue from coal hurts the government’s ability to provide things like education and infrastructure.

While Deskins and the state would like to see other industries stand on their own so everything isn’t heavily reliant on coal, it just hasn’t happened the way they would like, he said. As it stands, coal rules in West Virginia.

“We are having a hard time seeing other industries really break out,” he said. “We want to be energy strong, but we want other industries like tourism and manufacturing o be strong as well. But, any gains in those industries are small enough that they are overshadowed by movement in coal.”

Construction is another industry that, if successful, could help boost West Virginia’s economy, but it’s tied so closely to the natural gas that it’ll need that industry to pick up first. In the meantime, the service industry is following the trend across the country and growing more rapidly.

 “Just look at the employment composition,” Deskins said. “So many of our jobs are in service-oriented sectors to begin with. They are actually good-producing sectors like natural resources, manufacturing and construction. Services are definitely over half of our overall employment in the state.” 

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