March 16, 1987
Economic conditions in the Ninth District have remained steady so far in 1987. Unemployment rates rose, but most of the increase was seasonal. Consumer spending picked up in February. In resource- related industries, conditions remained mixed. And while some agricultural areas continued to show scattered signs of stabilization, farmers of major crops are still dependent on government programs for much of their income.
Employment
So far this year, employment conditions have kept steady. Although
unemployment rates in district states rose in January, much of the
increase appears to be seasonal. Large layoffs of temporary retail
workers, hired for the holidays, resulted in higher unemployment
rates. In the Minneapolis/St. Paul metro area, however, January's
unemployment rate was still 0.4 percentage points lower than it was
in January 1985. And the number of initial unemployment claims filed
during January in Minnesota was 12.8 percent lower than those filed
a year earlier. In South Dakota, non-farm employment was 1.5 percent
higher during January than it was a year earlier. A Bank director
reports that employment conditions in western Wisconsin appeared to
be a little better than last year. But In Montana, unemployment
appeared to increase during January.
Consumer Spending
Retail sales of general merchandise by larger retailers posted solid
gains in February. One chain in the Minneapolis/St. Paul metro area
reports that February was its best overall month in the last five
years or so. That chain experienced double-digit sales gains in
almost every major line. Another large retailer also experienced
double-digit gains compared to February 1985. This retailer also
notes that consumers seem to be using their credit cards more
moderately by carrying lower balances and defaulting less. Both
retailers say their inventories are at satisfactory levels. Another
chain, operating throughout the district, reports that even though
general conditions in rural areas have stopped declining, they
haven't yet picked up.
Sales of motor vehicles, after a very slow January, accelerated in February. One domestic manufacturer notes that its district car sales were much higher, while its truck sales only posted a modest gain. Another domestic manufacturer reports that unusually warm weather seemed to hamper its sales of' trucks and four-wheel-drive vehicles. Existing incentive programs seem to be sufficient to stimulate sales.
Housing market conditions in Minnesota are still favorable, although residential building contracts fell throughout the state in January. A representative of Twin Cities realtors is more positive about single-family housing prospects than a year ago. In contrast, housing activity is still way down in Montana's and North Dakota's largely inactive oil-drilling areas.
While not all resort areas experienced good winter tourism conditions, many that did had good business. A Bank director reports that one large resort in Michigan's Upper Peninsula had its best season ever, while lack of snow created problems for another resort there. Two observers in Montana report that an influx of Canadian tourists helped resort business there.
Resource-Related Industries
Little change was evident in the district's major resource-related
industries, where conditions remained mixed. In Montana and North
Dakota, oil and gas activity remained in the doldrums, and coal
production decreased. A continued lack of demand for iron ore was
evident from the decision to permanently lay off 400 workers from a
northeastern Minnesota ore-processing facility. But demand for
forest products remained firm as a result, a plywood plant in
Michigan's Upper Peninsula is expanding, says one Bank director.
Agriculture
Agricultural conditions continued to stabilize early this year. Bank
directors note that the winter wheat crop appears to be in good
condition in Montana and parts of South Dakota. They also report
that livestock prices remained at profitable levels. A Bank director
reports that favorable prices for potatoes and beans have helped
stabilize farmland prices in northeastern North Dakota, where farm
equipment sales have picked up. But major crop farmers are still
dependent on payments from government programs. And a lack of
snowfall has led some observers in western North Dakota and eastern
Montana to worry about the adequacy of soil moisture.