Northwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

1-2018

Abstract

Somewhat slower economic growth is expected in the Northwest Minnesota planning area 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 five index components decreased in the most recent quarter as the LEI fell 1.31 points. A decrease in the Rural Mainstreet Index (which signals a more challenging macroeconomic environment for rural America), a lower number of residential building permits in Fargo/Moorhead and Grand Forks/East Grand Forks, and declining new filings for LLC and incorporation in Northwest Minnesota all helped drag down the third quarter outlook. Lower initial jobless claims throughout the region had a favorable impact on the LEI.

There were 983 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the third quarter of 2017 — representing a 1 percent decrease from one year ago. Nearly 31 percent fewer new regional business incorporations were recorded compared to last year’s third quarter. New LLC filings in Northwest Minnesota were up 1.5 percent from one year earlier—rising to 538. New assumed names totaled 325 in the third quarter—7.6 percent more filings than the same period in 2016. There were 36 new filings for Northwest Minnesota non-profit in the third quarter—four fewer filings than one year ago.

Sixty-two percent of new business filers in the Northwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s third quarter. Results of this voluntary survey indicate that about 3.9 percent of new filers come from communities of color. Approximately 7 percent of new filers in Northwest Minnesota are veterans. About 1.3 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-eight percent of new business filings in Northwest Minnesota in this year’s third 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 74 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 47 percent of those starting a new business consider this a part-time activity.

Employment of Northwest Minnesota residents increased by 3.5 percent over the year ending September 2017. The regional unemployment rate was 3.0 percent in September, which was considerably lower than the 3.8 percent rate observed one year ago. Initial claims for unemployment insurance in September 2017 were 12.3 percent lower than one year earlier. Despite a 2.6 percent year-over-year increase in the Northwest Minnesota labor force, the regions job vacancy ratio increased in the first half of 2017. Northwest Minnesota’s total bankruptcies were higher than one year ago.

Economic performance in the Fargo/Moorhead Metropolitan Statistical Area (MSA) was mostly favorable in the past quarter. This MSA tallied gains in overall employment (as well as job gains in the key mining/logging/construction and manufacturing sectors), lower initial jobless claims, a rise in the regional workforce, increased average hourly earnings, a lower unemployment rate, and a declining relative cost of living. The area did experience reduced valuation of residential building permits and a decrease in average weekly work hours. Economic activity in the Grand Forks/East Grand Forks MSA was mixed in the third quarter. Lower overall employment (including a decrease in mining/logging/construction employment), a falling labor force, higher initial jobless claims, and lower average hourly earnings had a negative impact on the region’s economic outlook. A lower unemployment rate, higher average weekly work hours, an increase in the value of residential building permits, and rising manufacturing employment contributed favorably to the area’s economic performance.

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