Indiana’s unemployment rate was 3.1 percent in March preliminary estimates, the fourth month in a row at that rate.

Total employment is up significantly across the state compared to a year ago, according to Bureau of Labor Statistics data released Friday. That estimate is still nearly at a record-high for the last decade.

But year-over-year growth has slowed significantly in the manufacturing sector. In July 2022, the state’s total employment in that sector was 4.2 percent larger than the previous July.

The 12-month percent change in manufacturing employment has been steadily dropping since then. In March 2023, it was the lowest the industry had seen in almost two years at .4 percent.

In some parts of the state – particularly the Elkhart and Kokomo metro areas – the number of manufacturing jobs actually shrunk this March compared to last.

Warnings of a potential recession that would rock that labor market haven’t played out – yet. Inflation is still slightly rising and the Federal Reserve keeps hiking loan interest rates to fight it.

Those rates can make it harder for companies to borrow money, leading them to start downsizing, slowing production, freezing hiring and potentially laying people off. The hope is that’ll reduce demand on the global supply chain and bring down the sky-high prices for basic goods.

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But, economists and Reserve Chair Jerome Powell himself have warned that may be a recipe for a recession that would spike job losses, particularly in manufacturing. Indiana has a lot of workers to lose in that sector, so the state would likely be hit extra hard by such a recession.

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It’s not clear what will happen next with this tight labor market, but the state is actually expecting a good year economically.

A new revenue forecast this week gave state lawmakers an extra $1.5 billion to play with in the state budget as fears of a recession start to cool. A significant portion of the extra funding is expected to come from income taxes.

Despite the optimistic outlook, the State Budget Agency noted that the coming year could still contain economic surprises in its presentation to lawmakers.

“Inflation is estimated to reduce in the coming quarters but uncertainty remains,” the agency wrote on one slide of the presentation. “Volatility in U.S economy is estimated to diminish and [the] labor market remains tight.”

Adam is our labor and employment reporter. Contact him at arayes@wvpe.org or follow him on Twitter at @arayesIPB.