Southeast Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

3-2016

Abstract

Southeast Minnesota economic performance is expected to remain steady 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 fell by 11.23 points, the Southeast Minnesota leading index increased by 0.8 points in the fourth quarter of 2015. Three of the five index components were negative in the most recent quarter. Weakness in the Minnesota Business Conditions Index (which serves as a general measure of state business conditions), rising quarterly claims for unemployment benefits, and a decline in new business filings for incorporation and LLC served as a drag on the fourth quarter LEI. A larger number of residential building permits in the Rochester area and an improvement in consumer sentiment helped drive the index higher in the fourth quarter.

There were 740 new business filings with the Office of the Minnesota Secretary of State in Southeast Minnesota in the fourth quarter of 2015 — representing a 1.9 percent decline from one year ago. There were 61 new regional business incorporations in the fourth quarter, a 31.5 percent fall from prior year levels. Fourth quarter new limited liability company (LLC) filings in Southeast Minnesota rose by 1.4 percent (to a total of 420) compared to the fourth quarter of 2014. New assumed names totaled 221 in the fourth quarter—a 4.7 percent improvement over the same quarter in 2014. There were 38 new filings for Southeast Minnesota non-profits over the three months ending December 2015— two fewer filings than one year earlier.

Employment of Southeast Minnesota residents increased by 1.9 percent over the year ending December 2015. Compared to December 2014, 5,105 more residents of Southeast Minnesota now have jobs. The regional unemployment rate was 3.1 percent in December, an improvement from 3.2 percent in the year earlier period. Initial claims for unemployment insurance in December 2015 were 15.2 percent lower than one year earlier. The Southeast Minnesota labor force expanded by 1.8 percent in 2015 and average weekly wages fell $6 to $851 in the second quarter of 2015. Southeast planning area bankruptcies continued to fall throughout 2015.

Data from the Rochester area—the largest market in Southeast Minnesota—were mixed, with a small increase in employment in the key health/education sector, higher average hourly earnings, a lower unemployment rate, a reduction in initial jobless claims, and an expanding labor force having a positive impact on the outlook. On the negative side was a shorter workweek, declining overall employment (and a reduction in manufacturing employment), a lower value of residential building permits, and reduced new business filings.

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