Beige Book Report: Minneapolis
May 1, 1991
Ninth District economic conditions have been uneven. Labor market conditions have declined in much of the District with the only bright spots being North and South Dakota. Automobile sales continue to be depressed relative to a year ago, though there are signs of improvement. Housing sales have rebounded, but housing remains below its 1980's levels. Conditions in manufacturing and resource-related industries have been mixed.
Employment
Labor market conditions were mixed in the District, with North and
South Dakota continuing to buck the national trend, while the rest
of the District generally deteriorated. Unemployment rates in North
Dakota fell to 4.6 percent in February from 5.0 percent a year ago,
while in South Dakota they went to 3.9 from 4.1 percent over the
same period. North and South Dakota's strength was mirrored in job
creation, with February's number of employed rising 2.4 and 3.3
percent, respectively, relative to a year ago. This job growth in
North Dakota occurred primarily in manufacturing and trade, with
employment growing 7.3 and 2.5 percent, respectively, in February
over their year ago levels. South Dakota also showed growth in the
trade sector, but additionally construction employment was up by
13.5 percent in February relative to the same time last year. The
unemployment rate in Minnesota rose to 6.6 percent in February, up
from 5.3 percent a year ago, while employment was essentially
unchanged in March from its level of a year ago. Additionally, the
Minneapolis-St. Paul help-wanted advertising index was also down
30.1 percent in February relative to a year ago. Unemployment rates
were also up in Montana and the Upper Peninsula of Michigan in
February relative to their year ago levels--7.5 percent from 5.9,
and 12.3 percent from 9.9, respectively. This is somewhat surprising
in tile case of Montana since employment rose 2.4 percent over this
period. Labor market conditions were mixed in western Wisconsin.
Consumer Spending
District retailers of general merchandise report sharply higher
sales figures in March as opposed to a year ago, but this was caused
in large part by the fact that Easter fell in March this year and
April last year. In February retailers had reported lower sales
relative to a year ago in comparable stores, though Minnesota state
sales tax receipts were almost 2 percent higher relative to a year
ago. The situation will not become clear until April figures become
available, though some retailers have expressed optimism about the
summer and fall.
New car and truck sales generally have been weak so far this year, in some cases year-to-date sales were down as much as 25 to 30 percent relative to a year ago. As a result, several dealerships in the District have gone out of business. There have been some positive reports for the first 10 days of April, with one dealer reporting new car sales 10 percent higher than a year ago, and there is guarded optimism about the rest of the year.
Housing has been depressed in the District due in large part to the depressed market in the Minneapolis-St. Paul area, with permits down 14 per cent in February relative to a year ago. (A recent HUD study foresees demand for new housing in the Twin Cities area failing by 2 or 3 percent over the next two years.) However, housing sales in the District were higher in March, with sales in Minneapolis-St. Paul 12 percent higher in March relative to a year ago.
Tourism activity has generally been moderate to good. The number of crossings over the Mackinac Bridge onto the Upper Peninsula of Michigan set a new record in January, up 1.2 per cent from a year ago. Tourism has been strong in South Dakota, especially in the Black Hills and Badlands areas. The popularity of the movie, "Dances with Wolves," which was filmed in South Dakota, and the fiftieth anniversary of Mount Rushmore in July are expected to have a positive impact. The outlook for the summer season is positive, especially with gas prices staying low.
Construction and Manufacturing
Conditions in the District's construction industry have been mixed.
The continuing overhang of office space in the Minneapolis-St. Paul
area has depressed local construction activity.
Overall conditions in the District's manufacturing industries have been poor of late. An index of Minnesota economic indicators declined only slightly from its year ago level in January, however manufacturing employment in the state was down almost 3 percent in March from its year ago level.
Resource-Related Industries
Ninth District conditions of resource-related industries have been
mixed. The Minnesota index of prices received by farmers rose by
almost 2 percent during the first 15 days of March, but was still
5.6 percent below its year ago level, due in large part to the fall
in dairy and crop prices. However, cattle and hog prices are at
record levels. Precipitation has been below normal in most of the
District. South Dakota, in particular, has had between 40 and 60 per
cent of normal rainfall thus far this year.
The District's mining industry conditions have been fairly good. However, the oil business continues to decline with employment the lowest in years and drilling only in proven fields.