Survey: Rosier Outlook for
Minnesota's Manufacturers

St. Paul—After a rapid slowdown during the first six months of 2001, Minnesota's manufacturers are more optimistic about business conditions for the rest of the year. About 80 percent expected employment to increase or stabilize at current levels during the second half of 2001 compared to 41 percent who reported cuts during the first half according to survey results released today by the Minnesota Department of Employment and Economic Development.

The survey, done in conjunction with the Federal Reserve Bank of Minneapolis, found that manufacturers were in general agreement, regardless of their location, size or type of manufacturing. However, large businesses and those located in the Twin Cities were slightly more optimistic.

“Although Minnesota's manufacturing level has fared better than many states, the slowdown has been painful for families affected by layoffs,” said Commissioner Rebecca Yanisch. “It is good news that businesses expect the slowdown to be brief with economic conditions improving during the latter part of 2001.”

Businesses responded on a variety of factors including, number of orders, production level, investment, employment and profits. Among other survey findings: 73 percent of business survey respondents believed the number of orders would either increase or remain the same for the remainder of the year, and 78 percent believed the production level would increase or remain the same. More than 60 percent indicated that capital investment and profits would increase or remain the same.

“When the results are adjusted so large employers are given more weight than small employers, the results are even more encouraging,” said Office of Analysis and Evaluation Director Bob Isaacson. “This news suggests that the Minnesota economy has caught its breath and is ready to take baby steps forward.”

Since manufacturing has been hit the hardest by the economic slowdown, it's not surprising that the findings suggest the state's manufacturers believed that manufacturing would be leading the economic turnaround. Although most were more optimistic about the outlook for their businesses, only about half indicated that economic conditions would improve or stabilize this year. On the positive side, 70 percent thought that inflation would be stable or decline.

For more detailed results, see the news and information page on DEED's website: www.deed.state.mn.us.

As one of the 12 Federal Reserve Banks, the Federal Reserve Bank of Minneapolis contributes to a variety of Federal Reserve System functions, including operation of a nationwide payments system, distribution of the nation’s currency and coin, supervision and regulation of member banks and bank holding companies, and serving as a fiscal agent for the U.S. Treasury. Additionally, the president of the Minneapolis Fed serves as a member of the Federal Open Market Committee, the monetary policymaking arm of the Federal Reserve’s Board of Governors.

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