Northwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

3-2016

Abstract

A steady pace of economic activity is expected in Northwest Minnesota over the next several months according to the predictions of the St. Cloud State University (SCSU) Northwest Minnesota Index of Leading Economic Indicators (LEI). Two of the five components of the leading index were lower in the fourth quarter and the LEI was essentially unchanged at -0.24 points. A fall in the Rural Mainstreet Index (which signals a more challenging macroeconomic environment for rural America) and a rise in initial jobless claims were the two components that helped drag down the LEI. Increased new filings for incorporation and limited liability companies (LLCs) and a rise in the number of residential building permits in the Fargo/Moorhead and Grand Forks/East Grand Forks areas contributed favorably to the regional outlook. Improvement in consumer sentiment was also a positive indicator in the fourth quarter.

There were 923 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the fourth quarter of 2015 — representing a 7 percent increase from one year ago. 112 new regional business incorporations were recorded in the most recent quarter, a 7 percent increase from the same quarter in 2014. In the fourth quarter, new LLC filings in Northwest Minnesota were up 6.1 percent from one year earlier—increasing to 504. New assumed names totaled 259 in the fourth quarter—1.5 percent fewer filings than the same period in 2014. There were 48 new filings for Northwest Minnesota non-profits in the fourth quarter—41.2 percent more filings than one year ago.

Employment of Northwest Minnesota residents increased by 3.6 percent over the year ending December 2015. The regional unemployment rate was 5.2 percent in December, significantly lower than one year ago. Initial claims for unemployment insurance in December were 789 higher (an increase of 16.7 percent) than in December 2014. The average weekly wage rate in Northwest Minnesota was $680 in the second quarter of 2015, an annual increase of 2.6 percent. The regional labor force expanded by 11,517 (a 3.9 percent increase) from one year earlier and the region’s total bankruptcies fell to their lowest level in several years.

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 hours worked, an increased work force, and a lower unemployment rate. This was offset by reduced valuation of residential building permits, lower average hourly earnings, 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 fourth quarter. Higher overall employment, a lower unemployment rate, a rising labor force, and higher average hourly earnings were offset by declining weekly work hours, a reduction in the value of residential building permits, increased initial jobless claims, and flat manufacturing employment.

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