Northwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

6-2015

Abstract

Northwest Minnesota business conditions are expected to slow over the next several months according to the predictions of the St. Cloud State University (SCSU) Northwest Minnesota Index of Leading Economic Indicators (LEI). A weaker macroeconomic environment for rural America and softness in consumer sentiment have contributed to an 8.01 point decline in the LEI. With two consecutive quarters of decline in the LEI, the Northwest Minnesota economy seems likely to grow less rapidly over the next several months. While a sustained downturn in economic activity seems unlikely to hit this portion of the state, it is worth noting that weakness in the agriculture and energy sectors could adversely affect economic performance in this planning area. Three components of the LEI improved in the first quarter, including a rise in new incorporations and limited liability companies (LLCs), reduced initial jobless claims, and an increase in residential building permits in the two key metropolitan areas of Northwest Minnesota.

There were 1,102 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the first quarter of 2015 — representing a 7.6 percent increase from one year ago. 117 new regional business incorporations were recorded in the first three months of this year, a 2.5 percent reduction from last year’s first quarter. In the first quarter, new LLC filings in Northwest Minnesota were up 15.4 percent—increasing to 593. New assumed names totaled 343 in this year’s first quarter—a reduction of 0.6 percent from the same period in 2014. There were 49 new filings for Northwest Minnesota non-profits in the first quarter—8.9 percent more filings than one year ago.

Employment of Northwest Minnesota residents increased by 4.5 percent over the year ending March 2015. The regional unemployment rate was 6.1 percent in March, an improvement on its 7 percent reading one year ago. Initial claims for unemployment insurance in April were 39 lower (a decrease of 2.5 percent) than in April 2014 and job vacancies per 100 unemployed increased slightly to 73.25 from a level of 71.69 in the prior six months. The regional labor force expanded by 10,558 (a 3.6 percent increase) from one year earlier.

The Fargo/Moorhead Metropolitan Statistical Area (MSA) experienced a mixed economic performance over the past quarter. This MSA tallied strong gains in overall employment (and a large increase in mining, logging, and construction employment) and average hourly earnings along with a large increase in residential building permits and an expanded work force. However, average hours worked were weaker, initial jobless claims increased, and the MSA unemployment rate rose in this area in the first quarter. Economic activity in the Grand Forks/East Grand Forks MSA was similarly mixed in the first three months of the year. Higher employment, a lower area unemployment rate, and a rising labor force were offset by declining weekly work hours, lower average hourly earnings, increased initial jobless claims, and a large reduction in residential building permits.

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