Beige Book Report: Minneapolis
July 16, 2025
Summary of Economic Activity
Ninth District economic activity was flat since the previous report. Employment rose slightly and wages grew moderately. Prices increased modestly overall, with greater pressure among manufacturers. Tourism activity increased and residential real estate was mixed. Manufacturing, vehicle sales, and commercial real estate were flat. Nonauto consumer spending, construction, and energy activity decreased. Agricultural conditions remained flat at weak levels. Activity among minority- and women-owned business enterprises was mixed.
Labor Markets
Employment rose slightly since the last report. Surveys found that hiring sentiment remained positive and job openings grew. Contacts reported increases in hiring, particularly in tourism and hospitality, but mostly for part-time and hourly workers rather than salaried, full-time workers. Some firms were postponing hiring due to the uncertainty of tariffs, even if they were not directly affected. Staffing firms reported spotty activity across the District. One firm with multiple District offices experienced a healthy recent increase in clients and improvements in job orders; a Montana firm said job orders were down after a strong first quarter; a Wisconsin contact said demand had improved after a slow first quarter; and in North Dakota, professional and skilled job opportunities rose while unskilled and administrative jobs were down. Employers reported good labor availability, including among professional workers. However, most job seekers were already employed and searching for better opportunities.
Wage growth was moderate overall, with some signs of slowing. Recent surveys found that wage pressure was similar to earlier in the year. But staffing firms reported slowing wage growth; two noted that the only clients raising wages were those that currently offered uncompetitive compensation. Another staffing firm reported that year-over-year wage levels for light industrial jobs have declined for two consecutive months. A Minnesota contact said that retailers were finding employees "without having to raise wages to attract them."
Prices
Price increases were modest overall with a slower rate of increase than the last report, but price pressures were greater among manufacturing contacts. About a quarter of District firms increased the prices they charged to customers in June from a month earlier, according to a monthly survey, and about the same percentage anticipated increasing their prices in the month ahead. Slightly less than half of respondents reported increased input prices over the previous month. Manufacturers continued to report that suppliers added surcharges on orders in response to tariffs, particularly those on steel and aluminum. A construction materials supplier commented that "it seems that prices have gone up out of fear that prices will go up." In contrast, a custom manufacturer reported that tariffs impacted only a small percentage of their inputs. Retail fuel prices were little changed in most District states since the last report, except for Montana, where prices increased slightly.
Worker Experience
Most employed respondents to a recent survey remained satisfied with schedule flexibility and were less satisfied with career advancement opportunities. The top priorities for unemployed respondents as they looked for work were good pay and schedule flexibility. Most believed that gaining new skills or pursuing higher education would help their career prospects. A contact familiar with immigrant communities in Minnesota noted that undocumented immigrants continued to show up for work, but they were avoiding some shopping, traveling, and other leisure activities out of fear. Other workers were changing jobs as a strategy to minimize the risk of deportation.
Consumer Spending
Consumer spending was slightly lower since the last report. Retailers in Minnesota and South Dakota noted foot traffic was flat-to-down and overall spending was lower. Middle- and high-income consumers were reportedly becoming more price conscious. A Montana salon owner reported that customers were extending time between haircuts and other services. A contact believed that stronger purchasing in advance of tariffs may be dampening recent spending. However, tourism contacts generally reported solid activity. A contact in northwestern Minnesota said that "consumer spending may be tightening a bit, but overall, tourism and local shopping remain active.... Stores and restaurants are busy." A Wisconsin contact pointed out that local businesses were able to take advantage of good crowds "because their labor situations have improved." However, sources also noted that international travel was down, especially from Canada. Hotel occupancy rates were lower in the Dakotas and Montana, and higher in Minnesota and Wisconsin. Recent car and truck sales were flat, and sales of recreational and powersport vehicles were lower than last year.
Construction and Real Estate
Construction activity was modestly lower on balance, driven mostly by a decline in active residential projects and a slow replenishing of backlogs. Interest rates, material costs, and trade policy remained limiting factors among industry contacts. Permitting activity increased moderately across most District markets, and several contacts reported increased orders. Expectations for the upcoming weeks were mixed as customers held back investments on larger projects. "I do have work scheduled but nothing exciting until August," shared a Minnesota contact, adding that their current workload consisted of maintenance and small jobs.
Commercial real estate was flat overall. High financing rates and economic uncertainty continued to dampen new development in most subsectors. Office vacancy rates remained high, but leasing activity has reportedly picked up as companies looked for better space to meet evolving needs. Residential real estate was mixed. Closed home sales in May in Minnesota were virtually unchanged compared with a year ago; elsewhere, the share of markets with increased sales were similar to those with decreased sales.
Manufacturing
District manufacturing activity was flat on balance since the previous report. Manufacturing survey respondents reported a net decrease in orders in June from the month prior; the month-ahead outlook was also negative. In contrast, the index of regional manufacturing conditions indicated activity increased in Minnesota and North Dakota in June from the previous month, while activity in South Dakota contracted. A producer of fluid handling systems reported a slowdown in capital spending among their customers. A metal fabricator reported that current business volumes were stable but there "appears to be an ominous volume cliff ahead which is signaling a dramatic downturn."
Agriculture, Energy, and Natural Resources
District agricultural conditions remained weak overall, but crop progress was solid in much of the District. According to preliminary results from the most recent Ag Credit Survey, a strong majority of respondents reported that farm incomes decreased in the second quarter from a year earlier. The majority of corn and soybeans were in good or excellent condition, and most of the eastern portions of the District were free of significant drought. However, drier conditions prevailed further west, and wheat conditions were weaker. Oil and gas exploration activity and production decreased slightly since the previous report. An ethanol producer described demand as steady.
Minority- and Women-Owned Business Enterprises
Activity among minority- and women-owned business enterprises (MWBE) was mixed, and most contacts expected declines in activity over the upcoming weeks. Nonlabor input costs continued to put pressure on profitability as business owners experienced a reduced ability to pass on costs to consumers. "Our costs will not change, but the cost of building materials [is] going up," said a contact in the construction industry. Both employment and compensation edged lower among this group of businesses, with further declines expected in the short term.
For more information about District economic conditions visit: https://www.minneapolisfed.org/region-and-community/regional-economic-surveys.