June 17, 1992
Economic conditions in the District were generally steady. Labor markets continued to show signs of mild improvements. Retail sales continued to exhibit growth relative to last year's level, while home sales showed some signs of retrenchment after a very strong first quarter. Manufacturing was steady to positive in the District, while conditions in the construction sector were mixed with poor conditions in commercial construction offsetting the strong performance of residential construction. Conditions in both the agricultural and mining sectors were mixed.
Employment, Wages, and Prices
There is some evidence that labor markets are modestly stronger. The
latest reported unemployment rates were generally lower around the
District. For example, in April, Minnesota's 5.0 percent
unemployment rate was slightly below its year-ago level, but
substantially below its March level. Directors report that more
recent conditions in labor markets continue to show signs of
improvement. There is also some evidence that labor markets will
continue to improve. A recent survey of business intentions in
Minnesota indicated that while slightly fewer firms were planning to
increase employment than a year ago, fewer firms were planning
reductions. On net the reduction in declines outweighed the decrease
in expansions.
Price and wage increases are reported to be moderate with the exception of medical costs and, in parts of the District, construction costs.
Consumer Spending
Consumer spending around the District is generally moderate with
some areas of strength. Major retailers in the District reported
sales increases among comparable stores in May ranging from 5 to 9
percent relative to a year ago. Canadian shopping continues to be
generally strong in areas close to the border, with retail outlets
in shopping malls reporting year-to-date sales increases of 17 to 30
percent. However, at least with regard to appliance sales, recent
new regulations on appliance sales and service by the Canadian
government are reported to be having some effect on discouraging
appliance sales.
New car sales were mixed in May and ranged from up 20 percent to down 12 percent relative to a year ago. New truck sales in May ranged from up 1 percent to up 14 percent relative to levels of a year ago. Auctions of "nearly new" fleet cars are reported to be particularly strong in the Minneapolis-St. Paul area, attracting many bidders and sometimes aggressive bidding. Dealers are generally optimistic about new car and truck sales for the remainder of the year.
Home sales which were generally quite strong in the first quarter, showed some downward adjustment in parts of the District. After a record-setting first quarter, used home sales in the Minneapolis-St. Paul area dropped 2.7 percent. However, the housing market is reported to be booming in parts of Montana, due in part to the continuing influx of wealthy out-of-state buyers.
The summer vacation season is only just beginning, but indications are generally positive. Glacier National Park is already reported to be completely booked for the summer. Bridge crossings over the Mackinac Bridge onto the Upper Peninsula set a record for April, up 6.2 percent relative to a year ago. Recent changes in airfares are expected to have some positive impact through the summer months. However, this stimulus to tourism will be less felt in this District than in many others, since a high fraction of our District's tourists travel by auto.
Construction and Manufacturing
Residential construction was generally strong in the District.
Permits for single-family homes were up 18 percent in the
Minneapolis-St. Paul area relative to a year ago. Some areas, such
as Great Falls, Montana, report that rising building costs are
restraining growth. Conditions in commercial construction were mixed
with the important Minneapolis-St. Paul area continuing to show
weakness due to the overhang of office space.
Conditions continued to be steady in the District's manufacturing sector. The April level of average weekly hours in manufacturing in Minnesota of 40.0, while down slightly from the month before, was slightly above its year-ago level. The April level of Minnesota's average hourly earnings in manufacturing was up two-tenths of one percent.
Resource-Related Industries
Conditions were mixed in the agricultural sector. The North Dakota
mid-April index of prices received on farm products was unchanged
from its year-ago level with crop price increases of 6 percent
offset by livestock price declines of 7 percent. Moisture conditions
appear to be mixed in the District. North Dakota's pastures are
greener than they have been in years, but continuing dry weather
could change that, while parts of Montana and Minnesota report
inadequate moisture. Farm land prices were mixed, with the January
value of land and buildings up 4 percent in South Dakota and down 3
percent in North Dakota.
Conditions in the District's mining and lumber industries were mixed. While mining production generally remains steady, some prices have fallen. The price of copper is off by 9 percent since the first of the year. Oil production is generally lower in the District, though the number of active drilling rigs, while small, is up. Concern remains about the availability of timber to District saw mills.