Indiana Employers Face Tight Labor in 2027
Construction and manufacturers should plan 2027 hiring around a labor supply that shrank in 2026 even as output grows.
Updated on Nov. 4, 2026 in Economic Indicators
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The Indiana University Kelley School of Business released its annual economic forecast for 2027 on Wednesday, projecting 2.8% growth in Indiana's real economic activity and 2.6% growth for the U.S. economy. Operators in Indiana should note the forecast is tempered by concerns over inflation, high interest rates, and possible overvaluation of artificial intelligence stocks.
Why it matters
The forecast gives Indiana businesses a baseline planning scenario for 2027 that assumes moderate, steady growth, with downside risks from inflation, interest rates, and equity valuations. Because Indiana's labor supply shrank in 2026, hiring capacity and labor costs are likely to remain a planning constraint for employers across the state.
The forecast projects Indiana construction growth of 4.6%, durable goods manufacturing growth of 5.6%, nondurable goods manufacturing growth of 3.6%, and professional and business services growth of 3%. The $1 billion in tax credits allocated for the BioHeartland initiative also sits within the state outlook.
The players
Indiana University Kelley School of Business
A business school within Indiana University that publishes annual economic forecasts and runs an Evening MBA program in Indianapolis.
Indiana Business Research Center
The research unit that produces detailed state-level economic outlooks for Indiana.
The details
The forecast is built on a baseline model that assumes steady, moderate growth through the coming year rather than a sharp shift in either direction. Indiana's projected 0.5% employment growth against 0.2% labor force growth implies that hiring will be constrained by limited worker supply even as demand for output expands. The detailed state-level outlook is produced by the Indiana Business Research Center and is slated for publication online in December 2026.
Timeline
November 4, 2026: IU Kelley School releases its 2027 economic forecast.
Third quarter 2026: U.S. GDP grows 3.4%.
Full year 2026: Indiana's labor supply shrinks.
December 2026: Detailed 2027 outlook report is published online.
2027: Forecasted economic growth and unemployment decline take effect.
Market Landscape
The Kelley School's 2027 forecast follows the Indiana Business Research Center's state-level outlook method, which pairs a national growth projection with Indiana-specific sector and labor estimates. Its tempered tone, citing inflation, interest rates, and artificial intelligence stock valuations, places Indiana's outlook against the same national risk factors shaping broader market expectations.
Indiana operators should build 2027 budgets around moderate growth while stress-testing for higher inflation and interest rates. Employers in construction and manufacturing should plan hiring against a labor supply that shrank in 2026 and is projected to barely grow.
The takeaway
Plan 2027 on the forecast's moderate-growth baseline, but set contingency budgets for inflation and rate pressure. Watch the Indiana Business Research Center's December outlook for sector-level detail before finalizing hiring and capital plans.
What happens next
Detailed 2027 state-level outlook from the Indiana Business Research Center is scheduled for publication online in December 2026.
Further reading
For broader context on how these projections are measured, see Economic Indicators across Indiana and the U.S. economy.
Source note: This article includes information reported by Fox 59.
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