November 30, 1988
Ninth District Economic Conditions are good. Unemployment rates have not changed much. Consumer spending has stayed at satisfactory levels and consumer price increases continued to be moderate, but some raw material prices have increased sharply. Conditions in resource-related industries continued to improve and those in agriculture remain largely unchanged.
Labor Markets
The employment situation has been good throughout the district.
Between August and September, Minnesota's unemployment rate dropped
two-tenths of a percentage point to 3.4 percent; this is lower than
the 4.2 percent rate of a year earlier. A director notes increased
turnover of the work force in the Twin Cities Metropolitan Area,
particularly in jobs paying less than $6/hour, suggesting that labor
markets are tight. South Dakota's September unemployment rate at 3.5
percent edged up modestly from the year ago rate of 3.4 percent.
North Dakota's unemployment rate rose to 3.9 percent in September
from 3.3 percent a year earlier. In Montana the unemployment rate in
September was 4.7 percent, down a full percentage point from the
previous year. However, the labor force was 3 percent smaller than a
year earlier. In the Upper Peninsula of Michigan, the unemployment
rate was 6.3 percent in September, compared to 7.3 percent a year
ago.
Consumer Spending
Consumer spending on general merchandise continues to increase and
retailers generally anticipate good Christmas sales. Inventories are
at acceptable levels. The Upper Peninsula, particularly, reports
strong sales. Consumer loans from banks in that region are up 31
percent in the first ten months of this year from a year ago.
Motor vehicles are generally selling well, though there is reported to be some shift from new to used car sales, particularly in the Dakotas. One domestic line reports that car sales were up 36 percent in October from the depressed levels of a year ago. Truck and van sales are particularly good and manufacturers report difficulty in meeting demand. Recreational vehicles are selling exceptionally well and the bigger and better 1989 models are in heavy demand.
Housing activity is generally lower than a year ago. The number of new housing permits issued in Minnesota in September was down 35 percent from a year ago. Reflecting recent strength, total housing sales in the Twin Cities area in October were up 33.4 percent from a year ago. However they were down 13.2 percent for the first ten months of the year compared with the same period last year. Housing activity is good in some parts of the district. The Upper Peninsula reports that new mortgages issued by banks are at record levels. Mobile home sales are reported to be higher in South Dakota than last year.
Tourist spending continues to be strong, particularly in the Upper Peninsula which reports the number of tourists was 10 percent higher thus far this year than last year. Ski resorts anticipate an excellent year due to the early and heavy snowfall in many areas. An initiative to allow limited gambling in the city of Deadwood, South Dakota has passed and is expected to be approved by the Legislature. Proponents hope this move will attract more tourists to that historic city.
Prices
Consumer price increases continued to be moderate in the district.
However, many agricultural prices are reported to be up sharply over
last year. Corn prices are up to $82 per ton from about $55 per ton
at this time last year. Some raw material prices are also up
sharply. For example, aluminum prices are up to $1.10 per lb. from
$0.80 per lb. a year ago. Copper prices are up to $1.40 per lb. from
$1.10 per lb. a year ago.
Resource-Related Industries
Conditions are generally reported to be excellent in the district's
resource-related industries. The lumber industry in Montana had an
outstanding year. Productivity improvements in this industry over
the last five years have reduced the work force by about 25 percent
even though output is higher. Mining continues to be a bright spot
in Montana with a second platinum mine expected to open in 1989.
However, there are only 4 oil rigs now operating in the area. Gold
mining activity in South Dakota is also reported to be good. One
observer described the forest industry in the Upper Peninsula as
"going gangbusters." Furniture plants in the area have back orders
ranging from 6 weeks to 3 months. New copper smelters are being
considered for construction in the area.
Agriculture
Agricultural conditions are fair as the effects of the drought
recede. However, many areas still report low topsoil moisture.
Montana report that topsoil moisture is 60 percent below normal and
subsoil moisture is 65 to 70 percent below normal. Only 20 percent
of the topsoil in Minnesota is reported to have adequate moisture.
Early winter precipitation seems essential for a good winter wheat
harvest. Winter wheat planting in Montana is about 85 percent
completed. However, lack of snow cover raises the possibility of
significant crop loss. An estimated 99 percent of Minnesota's corn
crop has been harvested compared to a normal average by this time of
92 percent. The sugar beet crop is good in most of the district.