‹ Back to Archive Search

Beige Book Report: Minneapolis

October 15, 2025

Summary of Economic Activity
Ninth District economic activity was slightly down since the previous report. Employment was flat to slightly down, and wage growth was moderate. Prices increased modestly. Manufacturing and commercial real estate were flat; consumer spending, tourism, construction, residential real estate, and energy activity decreased; and agricultural conditions weakened. Activity among minority- and women-owned business enterprises continued to decline.

Labor Markets
Employment was down slightly since the last report. Surveys found softening labor demand among District employers, as well as declining head count, though seasonality played a role. A staffing firm with multiple offices saw hiring decline at the end of summer after an earlier uptick. A staffing contact in Michigan's Upper Peninsula noted healthy labor demand in manufacturing, construction, and mining, but acknowledged that "the uncertainty in the market has spurred more temp and temp-to-hire work in our area," rather than direct hiring. Hospitality and tourism firms reported that they were predominantly hiring to replace turnover; only one in ten were hiring new full-time employees, and a comparable share was cutting workers. However, recent unemployment claims across the District remained low overall. Montana employers reported healthy labor demand, but a contact said that "most hiring is to replace vacancies rather than support business expansion." Artificial intelligence was expected to have a slight dampening effect on future labor demand. A Minnesota advertising firm said there "will be a smaller need for entry-level folks" because AI tools "get this work done faster."

Wage growth was modest to moderate. Recent surveys suggested that wage pressure was easing slightly, and payroll contacts suggested that median wages were rising, but more slowly than earlier in the year. However, nearly three-quarters of hospitality and tourism firms reported wage increases of three percent or more.

Prices
Prices increased modestly over the reporting period, but input price pressures were greater. One-fifth of District firms increased the prices they charged to customers in September from a month earlier, and a similar share anticipated increasing their prices in the month ahead. More than half of respondents reported increased input prices over the previous month. Contacts noted significant increases in electricity rates and employee health care premiums for the coming year. Several manufacturers reported that they recently increased prices in response to tariffs or planned future increases. Retail fuel prices in District states decreased slightly on balance since the last report. Prices received by farmers increased in August from a year earlier for corn, sugar beets, potatoes, canola, sunflowers, cattle, hogs, and turkeys; prices for soybeans, wheat, pulse crops, hay, chickens, eggs, and milk decreased from a year earlier.

Worker Experience
Workers and job seekers in the region experienced an overall slower labor market. A job fair in Grand Forks, North Dakota, had the lowest employer registration numbers in a decade, and career services professionals were strongly advising clients not to quit their jobs before having another opportunity lined up. A labor contact in Minnesota observed that several grocery stores were reducing head count down to "skeleton crews," and workers were experiencing reduced hours "ranging from 15 to 18 hours down from 20 to 30 hours in 2024." Several contacts concurred that hiring had decelerated but also noted that terminations were infrequent.

Consumer Spending
Consumer spending was slightly lower. Retail, hospitality, and tourism firms reported lower foot traffic, revenue, and profits relative to a year ago. They also expected these trends to continue through the end of the year, with increasing pressure on margins. A contact from a northern Minnesota resort said that "growing labor and expense costs coupled with flat revenue has led to decreased profits." Another contact reported an unexpected drop in fall bookings after a solid summer and added that economic uncertainties "seem to create an air of caution among many and vacation spending seems to be curtailed" as a result. Hotel occupancy and average revenue per room were lower across most of the District. A mall contact said that "one message we are picking up from our consumers and tenants is that the consumer is looking for value, deals, and ways to stretch their dollars."

Construction and Real Estate
Construction activity decreased slightly, but the real value of construction permits rose moderately, driven by proposed new projects in Rochester, Minnesota and alterations and repairs elsewhere. Permits for new residential projects were notably lower. Contacts in Minnesota reported strong activity in infrastructure and had a positive outlook, mostly due to several proposals for large data centers. Contacts in North Dakota reported increased competition for projects and shrinking backlogs. They noted that the rise in input prices had plateaued, but they were concerned that requirements to build and assemble products in the U.S. could be more costly and cause inflation to accelerate.

Commercial real estate was flat. Lack of new construction across most sectors provided some stability for existing properties but little growth for the overall market. Industrial space was reportedly seeing increased subleasing, but overall vacancies remained low. Sales of office buildings continued to see steep price discounts. But office leasing improved, and landlords with the capacity to improve properties continued to have greater leasing success. Residential real estate fell. Recent home sales varied widely among larger District markets but were lower overall.

Manufacturing
Manufacturing activity in the District was flat on balance since the last report. Roughly equal numbers of industry contacts reported decreased orders and increased orders in September from the previous month, but relatively few reported no change. An index of regional manufacturing conditions indicated activity decreased in Minnesota and South Dakota in September from the previous month, while activity in North Dakota increased. Metal fabricators and producers of parts for equipment manufacturers noted a slowdown in orders, while contacts in home furnishings were more mixed.

Agriculture, Energy, and Natural Resources
Agricultural conditions weakened since the previous report. Corn production in District states was expected to set new records, and soybean harvests were very strong as well, but low crop prices and elevated expenses were weighing down producer incomes. Contacts were extremely concerned about the impacts of China's decision not to order soybeans from U.S. producers. District oil and gas exploration activity decreased since the last report. Contacts in the sector reported that higher input costs, particularly for metals, were raising the breakeven price for crude oil in the region.

Minority- and Women-Owned Business Enterprises
Activity among minority- and women-owned business enterprises (MWBE) continued to decline. A manufacturer and retailer in Wisconsin described the downturn in demand as "drastic," adding that consumers appeared to be cutting back on nonnecessities. Head counts were lower on balance, and labor demand ticked up slightly but remained on the lower end. A lower share of contacts reported higher final prices for their products or services. Fewer contacts were also increasing average compensation compared with last period.

For more information about District economic conditions visit: https://www.minneapolisfed.org/region-and-community.