Strong economic growth in Southeast Minnesota is expected to continue over the next several months according to the most recent prediction of the Southeast Minnesota Index of Leading Economic Indicators (LEI). After a quarter in which the LEI experienced a 4.04 point increase, the Southeast Minnesota leading index surged by 12.76 points in the first quarter of 2017. Four components of the LEI had positive readings in the first quarter. A decrease in initial claims for unemployment benefits, improvement in the Minnesota Business Conditions Index (which serves as a general measure of state business conditions), a larger number of residential building permits in Rochester, and increased new filings of incorporation and LLC in the Southeast Minnesota planning area all helped drive the LEI higher.
There were 932 new business filings with the Office of the Minnesota Secretary of State in Southeast Minnesota in the first quarter of 2017 — representing a 0.3 percent increase from one year ago. There were 70 new regional business incorporations in the first quarter, a 12.5 percent reduction from prior year levels. At a level of 585, first quarter new limited liability company (LLC) filings in Southeast Minnesota were 8.5 percent higher than the first quarter of 2016. With 246 filings, new assumed name activity was 8.9 percent lower than the same quarter last year. There were 9 fewer new filings for Southeast Minnesota non-profits over the last three months compared to one year earlier.
Sixty percent of new business filers in the Southeast Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s first quarter. Results of this voluntary survey indicate that more than five percent of new filers come from communities of color and nearly seven percent are veterans. Two percent of new filers come from the disability community and a similar percentage of new filings are made by the immigrant community. Thirty-six percent of new business filings in Southeast Minnesota in this year’s first quarter were initiated by women. MBS results also show that most new business filers in Southeast Minnesota have between 0 and $10,000 in annual gross revenues (although 53 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Southeast Minnesota are construction, retail trade, and other services. Employment levels at most new firms are between 0 and 5 workers, and 43 percent of those starting a new business consider this a part-time activity.
Employment of Southeast Minnesota residents fell by 0.1 percent over the year ending March 2017. The regional unemployment rate was 3.9 percent in March, lower than the 4.1 percent level recorded one year earlier. Initial claims for unemployment insurance in March 2017 were slightly higher than one year earlier and the Southeast Minnesota labor force contracted by 0.3 percent. Job vacancies in Southeast Minnesota remain elevated and the planning area’s bankruptcies fell.
Data from the Rochester area—the largest market in Southeast Minnesota—were mostly favorable, with an increase in overall employment (along with employment growth in the key health/education sector), higher new business filings, a rise in the value of residential building permits, a lower unemployment rate, and increased hourly earnings having a positive impact on the outlook. On the negative side was a smaller labor force and lower weekly work hours.
MacDonald, Richard A. and Banaian, King, "Southeast Minnesota Economic and Business Conditions Report - Spring Quarter 2017" (2017). Southeast Minnesota Economic and Business Conditions Report. 13.