Northwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

1-2016

Abstract

Northwest Minnesota business conditions are expected to soften over the next several months according to the predictions of the St. Cloud State University (SCSU) Northwest Minnesota Index of Leading Economic Indicators (LEI). All five components of the leading index were lower in the third quarter as the LEI retreated by 9.37 points. A more challenging macroeconomic environment for rural America and recent weakness in consumer sentiment were two components that helped drag down the LEI. In addition, rising initial jobless claims during the summer months and a prior decline in new filings for incorporation and limited liability companies (LLCs) weighed on the index. A fall in residential building permits earlier in the year in the key metropolitan areas of the region also made a negative contribution to this quarter’s LEI. Prior to this quarter’s LEI reading, the outlook had been quite favorable but recent weakness in the agriculture and energy sectors of the economy are certainly concerning. There is considerable uncertainty associated with predicting future economic performance in this region of Minnesota.

There were 926 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the third quarter of 2015 — representing a 3.6 percent increase from one year ago. 84 new regional business incorporations were recorded in the most recent quarter, a 16 percent reduction from the same quarter last year. In the third quarter, new LLC filings in Northwest Minnesota were up 9.2 percent from one year ago—increasing to 488. New assumed names totaled 308 in this year’s third quarter—an increase of 4.4 percent from the same period in 2014. There were 46 new filings for Northwest Minnesota non-profits in the third quarter—11.5 percent more filings than one year ago.

Employment of Northwest Minnesota residents increased by 1.8 percent over the year ending September 2015. The regional unemployment rate was 3.4 percent in September, slightly lower than one year ago. Initial claims for unemployment insurance in September were 22 lower (a decrease of 2 percent) than in September 2014 and the rate of job vacancies per 100 unemployed jumped to 76.73 in this year’s second quarter. The regional labor force expanded by 4,699 (a 1.6 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 gains in overall employment (but decreased employment in two key sectors), a rise in average hourly earnings, more residential building permits, and a lower unemployment rate. This was offset by a reduced work force, lower average hours worked, higher initial jobless claims, and a higher cost of living. Economic activity in the Grand Forks/East Grand Forks MSA was similarly mixed in the third quarter. Higher employment, a lower unemployment rate, lower initial jobless claims, and higher average hourly earnings were offset by declining weekly work hours, a reduction in residential building permits, and a declining labor force.

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