Northwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

10-2017

Abstract

The Northwest Minnesota planning area economy is expected to experience steady growth over the next several months according to the predictions of the St. Cloud State University Northwest Minnesota Index of Leading Economic Indicators (LEI). Three of the five index components increased as the LEI rose 1.78 points in the second quarter. An increase in the Rural Mainstreet Index (which signals an improving macroeconomic environment for rural America), lower initial jobless claims in the region, and an increase in new filings for LLC and incorporation in Northwest Minnesota all contributed favorably to the second quarter outlook. Weaker residential building permits in Fargo/Moorhead and Grand Forks/East Grand Forks and declining consumer sentiment weighed on the second quarter index.

There were 1,215 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the second quarter of 2017 — representing an 11.7 percent increase from one year ago. Nearly 2 percent more new regional business incorporations were recorded compared to last year’s second quarter. New LLC filings in Northwest Minnesota were up 16 percent from one year earlier—rising to 667. New assumed names totaled 381 in the second quarter—10.1 percent more filings than the same period in 2016. There were 46 new filings for Northwest Minnesota non-profit in the second quarter—two fewer filings than one year ago.

Sixty-four percent of new business filers in the Northwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s second quarter. Results of this voluntary survey indicate that about 2.4 percent of new filers come from communities of color. Approximately 6.6 percent of new filers in Northwest Minnesota are veterans. Fewer than 1.5 percent of new filers come from the disability community and less than 1 percent of new filings in Northwest Minnesota are made by the immigrant community. Thirty-six percent of new business filings in Northwest Minnesota in this year’s second quarter were initiated by women. MBS results also show that most new business filers in Northwest Minnesota have between 0 and $10,000 in annual gross revenues (although 72 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Northwest Minnesota are construction, retail trade, real estate/rental/leasing and other services. Employment levels at most new firms are between 0 and 5 workers, and 46 percent of those starting a new business consider this a part-time activity.

Employment of Northwest Minnesota residents increased by 0.4 percent over the year ending June 2017. The regional unemployment rate was 3.9 percent in June, which was considerably lower than the 4.4 percent rate observed one year ago. The Northwest Minnesota labor force contracted by 0.1 percent over the past twelve months (there are now 269 fewer people in the regional labor force than there was one year ago). Initial claims for unemployment insurance in June 2017 were 19.7 percent lower than one year earlier and the region’s average weekly wages flattened out. Northwest Minnesota’s total bankruptcies were higher than one year ago.

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