Northeast Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

3-2016

Abstract

Northeast Minnesota economic performance is expected to weaken over the next several months according to the predictions of the Northeast Minnesota Index of Leading Economic Indicators (LEI). Four of the five components of the LEI decreased in the fourth quarter as the overall index followed up a slight negative reading in the third quarter with a more significant decline in the final three months of 2015. A jump in initial jobless claims in the region and a large decline in filings for new business incorporation weighed on the fourth quarter LEI. In addition, weakness in a general measure of state business conditions and a decline in a supply managers’ survey index also served as a drag on the leading index.

There were 487 new business filings with the Office of the Minnesota Secretary of State in Northeast Minnesota in the fourth quarter of 2015 — representing a 1.9 percent increase from one year earlier. Forty-seven new regional business incorporations were filed in the fourth quarter—a 31.9 percent reduction from 2014. New limited liability company (LLC) filings in Northeast Minnesota rose 2.7 percent to a level of 266. New assumed names totaled 145 in the fourth quarter—a 13.3 percent increase from the fourth quarter of 2014. There were 29 new filings for Northeast Minnesota non-profits in the 2015 fourth quarter—seven more than one year earlier.

Northeast Minnesota employment was 1.1 percent higher than year earlier levels in December. The regional unemployment rate swelled to 6.2 percent (it was 4.7 percent in December 2014) as the labor force rose by 2.8 percent. The regional labor force is now 4,495 higher than it was at the end of 2014. December 2015 initial claims for unemployment insurance were 568 higher than the year earlier (a 24.3 percent increase). Average weekly wages rose 3.3 percent to a level of $761 in the second quarter of 2014. After trending downward for nearly 5 years, Northeast Minnesota bankruptcies appear to have leveled out.

Economic activity in the Duluth/Superior Metropolitan Statistical Area (MSA) was mixed. Northeast Minnesota’s largest market experienced a 0.5 percent rise in overall employment over the year ending December 2015, and the key education/health sector added jobs. The length of the workweek also rose. However, average hourly earnings fell, the area unemployment rate rose and the value of residential building permits fell. The MSA labor force increased, but manufacturing employment was flat.

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