Beige Book Report: Minneapolis
September 3, 2025
Summary of Economic Activity
Economic activity in the Ninth District was down slightly since the previous report. Employment was down slightly, and labor demand continued to soften. Price pressures increased modestly, and wage growth was moderate but easing. Consumer spending also softened. Construction was flat, while real estate markets were mostly flat. Manufacturing contracted slightly and agricultural conditions remained weak. Activity among minority- and women-owned business enterprises declined.
Labor Markets
Employment was down slightly since the last report. Surveys showed hiring sentiment and job openings continued to soften, and a slightly larger share of firms reported shrinking head counts compared with those seeing growth. Some firms were choosing not to fill turnover or other open positions given economic uncertainty. A construction subcontractor in Minnesota said that approved projects were being delayed due to the uncertainty, and "we are struggling to keep our people busy." Recent layoffs remained low, however, and unemployment insurance claims fell slightly. Those firms that were hiring generally found improved labor availability. A Wisconsin manufacturer of personal care products said it was "getting people applying that are over-skilled" for open positions. A North Dakota manufacturer experiencing growth said it was "able to replace attrition more readily," with most job candidates already employed elsewhere. A staffing firm saw demand for industrial workers increase for two consecutive months. A contact there said they were uncertain whether this was a sign of growing demand or employers' increased reluctance to hire directly.
Wage growth was modest to moderate and easing overall, according to recent surveys. Several contacts reported that recent trade union contracts saw significant wage gains. However, a professional services firm in Minneapolis–St. Paul said slow sales meant "the team will not receive any bonuses this year." A North Dakota bakery reported using turnover to keep wages flat by lowering rates for new hires to "balance out any wage increases to longer-term staff."
Prices
Price increases over the reporting period were modest, about the same pace of increase as the last report. One-quarter of District firms increased the prices they charged to customers in July from a month earlier, according to a monthly survey, and roughly the same percentage anticipated increasing their prices in the month ahead. About half of respondents reported increased input prices over the previous month. A manufacturer of home furnishings reported increased pressure to lower prices due to competition in the sector, even though input costs have increased. Other contacts said margins were already thin and their ability to absorb cost increases was limited. A retail contact reported numerous notifications from suppliers indicating price increases were coming. Retail fuel prices decreased slightly since the last report.
Worker Experience
Workforce development professionals reported worsening conditions for people looking for jobs as software engineers, media and creative services professionals, managers, and business and finance professionals. Job seekers looking for employment in more physically demanding jobs like cooks, servers, landscapers, and hairstylists were still able to get jobs with relative ease, but overall, opportunities were contracting. Some contacts noted increasing impacts from artificial intelligence (AI) in the region's labor market. While they referred to resume screening and AI interviewing tools as "barriers to employment," they also acknowledged that job seekers who used AI to refine their resumes and do mock interviews were enhancing their confidence and streamlining their job search experience.
Consumer Spending
Consumer spending was slightly lower since the last report. Retail contacts overall reported slower sales and foot traffic. A Montana brewery contact said, "July is our busiest month of the year. But it is still slow compared to previous years." Contacts reported increased price sensitivity. A home décor retailer in northern Wisconsin said that "right now, if we don't provide sales [discounts] to people they will not even bother to come in." International travel, especially from Canada, remained subdued, dampening sales for some businesses, particularly in regions nearer the border. Visitors to most national parks in the District were modestly lower in July year over year. Hotel occupancy rates were also lower in the Dakotas and Montana compared with last year, but higher in Minnesota and Wisconsin; average revenue per room was similarly mixed. A large vehicle dealer in the District experienced flat sales overall in July; new-vehicle sales were strong while sales of used vehicles fell.
Construction and Real Estate
Construction activity was flat since the last period. A recent survey revealed that interest rates, high material costs, and government policies were the top three challenges for construction firms. Most respondents were hiring but it remained difficult to find skilled workers. Employment in the sector was expected to grow modestly on balance over the coming months. The year-over-year value of permitting activity for new construction grew modestly, driven by stronger gains in residential permits. Permitting activity was strongest in Rochester, Minnesota; Rapid City, South Dakota; and Billings, Montana.
Commercial real estate was flat overall. High financing rates and economic uncertainty continued to dampen new development in retail, multifamily, and industrial space, benefiting existing property owners. Residential real estate was slightly higher overall, but with some variability. Home sales in July rose across Montana and northern Wisconsin compared with last year, but were flat in Fargo, North Dakota, and Sioux Falls, South Dakota. Sales fell modestly in western Wisconsin and Minneapolis–St. Paul, but rose across the rest of Minnesota.
Manufacturing
District manufacturing activity contracted slightly since the previous report. Reports among manufacturing contacts were somewhat mixed, as slightly more contacts reported decreased orders than increased orders, but relatively few reported steady business activity. An index of regional manufacturing conditions indicated activity decreased in Minnesota and South Dakota in July from the previous month, while activity in North Dakota increased. An equipment producer noted, "Our actual dollar sales volume is only down slightly from last year, but this is mostly due to the increased prices we are forced to charge; the actual volume of equipment made is down quite a bit."
Agriculture Energy and Natural Resources
District agricultural conditions remained weak. Preliminary estimates indicated strong expectations for crop yields and production in much of the District, given favorable weather and ample rainfall. However, crop prices were at or below break-even for many producers. An industry contact reported that the threat of tariffs was having a major impact on fertilizer prices. Oil and gas exploration activity was steady since the previous report, while production increased slightly.
Minority- and Women-Owned Business Enterprises
Activity among minority- and women-owned business enterprises (MWBEs) declined, and contacts expected further deceleration in the upcoming weeks. While activity slowed for the majority of contacts, some experienced higher demand for their services. The owner of an auto repair shop in South Dakota noted that customers were "spending more on maintenance items than last year at this time," adding that people seemed to be "planning to drive their used vehicles longer." Both employment and labor demand trended down among MWBEs. Upward pressure on compensation and input prices continued.
For more information about District economic conditions visit: https://www.minneapolisfed.org/region-and-community.