Beige Book Report: Minneapolis
June 19, 1991
Although the Ninth District has continued to feel the effects of the national recession, recently there is some evidence that the region is rebounding. Labor market conditions have improved slightly, while retail sales have exhibited moderate growth. Conditions in manufacturing, construction, and resource-related industries have been mixed.
Employment, Wages, and Prices
Labor market conditions improved in most of the District. North and
South Dakota have continued to do well, with their unemployment
rates falling in April from a year ago; 3.7 from 4.0, and 3.4 from
3.6 respectively. Minnesota rebounded in April with the unemployment
rate falling to 5.0 from 5.5 a year ago. In Minnesota, however, this
strength was a result of fewer people looking for work rather than
more people finding jobs. Total nonagricultural employment was
essentially unchanged in April from a year ago, with a drop in
manufacturing, construction, and trade employment offset by growth
in the service, financial, and government sectors. In North and
South Dakota, by contrast, nonagricultural employment was up 1.6 and
3.1 percent respectively in April from a year ago. A recent survey
of hiring activity in the Minneapolis-St. Paul area contained some
grounds for optimism; 20 percent of the companies surveyed reported
that they planned to increase the number of employees, while only 10
percent reported planned reductions. A Twin Cities help wanted index
was 28.6 percent below its year-ago level in April, though this was
better than at the national level where this was 31.7 percent below
its year-ago level. Unemployment rates in Montana and the Upper
Peninsula of Michigan were higher in April than their year-ago
levels; 6.7 percent from 5.3, and 12.3 percent from 9.8
respectively; and were generally higher in western Wisconsin. In
Montana nonagricultural employment rose by only 0.5 percent in April
relative to a year ago.
The state's average weekly hours in manufacturing at 39.7 in March, are still below their year-ago level of 40.0. However, March new business incorporations were substantially higher than their year- ago levels. Minnesota's April average weekly earnings in manufacturing was up 4.2 percent from its year-ago level, and up 1.8 percent from March. Employment in manufacturing in Minnesota and Montana was lower in April than its year-ago level by 2.0 and 2.8 percent respectively. However, it rose in North and South Dakota by 5.4 and 1.5 percent respectively over the same period.
Consumer Spending
Retail sales in the District exhibited moderate growth, and some
retailers expressed optimism about the future. March retail sales in
Minnesota were 4.9 percent higher than a year ago. One District
retailer reported first quarter sales in comparable stores were 9
percent higher, and May sales were 16 percent higher than the same
periods a year ago. However, a number of major local retailers
reported that sales were flat or only slightly higher in comparable
store sales in May relative to a year ago, though sales in the first
week of June are reported to be stronger.
New car sales in the District continue to be weak with dealers reporting sales declines of 6 to 11 percent thus far this year, relative to a year ago. Sales in May have continued this negative trend with dealers reporting new car sales declines of 11 to 20 percent, relative to a year ago. However, truck and used car sales appear to be picking up.
Housing sales have been weak in the District, due in large part to the depressed market in the Minneapolis-St. Paul area. However, recently both existing home sales and prices were up in Minneapolis- St. Paul. Existing home sales were up 13 percent in April relative to a year ago, posting a three-year high.
Tourism activity throughout the District has been generally good. The number of crossings over the Mackinac Bridge onto the Upper Peninsula of Michigan was up 1.2 percent in the first four months of this year, and 3 percent in May, relative to a year ago. Resort owners in northwestern Wisconsin report that lodging reservations are ahead of last year and general inquires are 30 percent higher than a year ago. In Minneapolis, the U.S. Open is just beginning on a local golf course. In addition, the Wally Byam Caravan Club International, whose Airstream Convention brought in S million dollars to the Duluth region in 1983, has returned to Minnesota this June and July. Also, the International Special Olympic Games will be held in the Minneapolis-St. Paul area in July.
Construction and Manufacturing
Conditions in the District's construction industry have been mixed.
The overhang of office space in the Minneapolis-St. Paul
metropolitan area is expected to continue to depress commercial
construction activity in the area. The value of future construction
contracts in the Minneapolis-St. Paul metropolitan area remain
substantially below year-ago levels. In addition, Minnesota housing
permits were down 17 percent in March from their year-ago level.
Manufacturing conditions in the District have been mixed lately. An index of Minnesota's economic indicators rose slightly in March, but is still 0.4 percent below its year-ago level.
Resource-Related Industries
Recent high levels of precipitation in the District were a blessing
for North and South Dakota. South Dakota, which had been reporting
40 to 60 percent of normal rainfall this year, reports that topsoil
moisture is now in excellent condition, while planting in North and
South Dakota is ahead of its five year average. However, recent
precipitation in southern Minnesota was so high that parts of the
state were flooded, and planting was delayed. Statewide, only 80
percent of the normal corn crop and 60 percent of the normal soybean
crop has been planted. For corn, in particular, time is running out.
The governor of Minnesota has applied to the Agriculture Department
for disaster relief. To make matters worse, the mid-April index of
prices received by Minnesota farmers was down 12 percent from a year
ago.
Conditions in the District's mining industry have been fairly good. Ranchers in the District have also been doing well due to high cattle prices.