Fueled by growth in technology and the residential housing market, Missoula’s banks and business services continued to grow in 2019, outpacing the state average, according to this year's economic report.

The data, compiled annually by the Bureau of Business and Economic Research, was presented Friday in Missoula, where economist Patrick Barkey described growth in the local economy as better than the state average.

Technically, Missoula County continues to grow in aggregate at a rate that exceeds the state average – continuing a growth spurt that began around 2016,” said Barkey, director of the Bureau of Business and Economic Research at the University of Montana.

Finance and business services in Missoula County, as measured in inflation-corrected earnings, was down from $55 million in 2017 to $50 million in 2018, according to Barkey.

Construction and manufacturing were also down, though less, from about $30.9 million in 2017 to $30.5 million in 2018. High tech industries, construction and manufacturing continue to lead the way, propelling much of western Montana's growth.

The biggest contributor to overall growth has been expansion in the local economy’s finance and business services industries, which reflects strong tech growth as well as financial institutions serving residential and commercial real estate markets,” Barkey said.

That means booming Missoula tech companies like Cognizant-ATG, Fintech and traditional lawyers, accountants and engineering consultants, fall under those two main categories.

Barkey said the trends will persist as Missoula continues to outpace the state.

Looking ahead, we expect to see a continuation of growth exceeding the state average, winding down a bit as the pace of the economic expansion cools in the coming years,” he said.

As for the overall statewide economy, since 2016, overall growth continues even as the labor market gets tighter and tighter.

Gallatin County, the No. 2 economy in the state, also leads in tech business growth, followed by Flathead, Missoula and Fergus counties. Economists expect Gallatin County to outpace its own growth by 5% this year. Flathead County follows at 3%, then Missoula County at 2.9%.

The main drivers of Missoula County's economy remain the University of Montana and other state government entities at 23%.

Other drivers of basic industries include trade and medical at 15% and federal government at 12%. Wood and paper comprise 6% according to this year's report, followed by retail and trade at 4%.

Down in Ravalli County, commuters represent the largest economic driver at 55%, followed by medical research at 16% and federal government at 7%. Agriculture and mining make up 6%, trucking 4% and wood products roughly 3%.

But the outlook for Montana’s key industries will not be without challenges, Barkey noted. The state's unemployment rate remains low (3.1% in Missoula County), which presents challenges for companies looking to grow and hire.

Barkey said “coal upheavals,” such as the future of Colstrip, could also hurt temporarily. Commodity businesses – except for palladium – face declining prices. The state is also highly vulnerable to retaliation in trade wars.

Barkey characterized residential construction as “the wild card.”

Contact Business Reporter Renata Birkenbuel at 406-565-0013 and renatab@missoulacurrent.com.