Southwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

10-2017

Abstract

Increased economic growth in Southwest Minnesota is expected over the next several months according to the predictions of the St. Cloud State University Southwest Minnesota Index of Leading Economic Indicators (LEI). Two of four LEI components were positive in the second quarter. An improvement in the rural outlook and lower jobless claims contributed favorably to the LEI in the second quarter. A decrease in residential building permits in the Mankato MSA and reduced new business filings of incorporation and LLC weighed on the leading index in the current quarter. After rising a revised 4.23 points in this year’s first quarter, the Southwest Minnesota LEI rose by 5.76 points in the current quarter.

There were 681 new business filings with the Office of the Minnesota Secretary of State in Southwest Minnesota in the second quarter of 2017 — representing 2.3 percent fewer new filings than one year ago. There were 57 new regional business incorporation filings in the second quarter, a 1.8 percent increase from last year’s second quarter. New LLC filings in Southwest Minnesota fell 2.2 percent from one year earlier and new assumed names climbed to 201—a 3.6 percent increase compared to June 2016. There were 21 new filings for Southwest Minnesota non-profit in the second quarter—15 fewer than one year earlier.

Sixty-one percent of new business filers in the Southwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s second quarter. Results of this voluntary survey indicate that a little over 4 percent of new filers come from communities of color. More than 8 percent of new business filings are from veterans. About 2.2 percent of new filers come from the disability community and a similar percentage of new filings are made by the immigrant community. Thirty-eight percent of new business filings in Southwest Minnesota in this year’s second quarter were initiated by women. MBS results also show that most new business filers in Southwest Minnesota have between 0 and $10,000 in annual gross revenues (although 44 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Southwest Minnesota are construction, retail trade, and other services. Employment levels at most new firms are between 0 and 5 workers, and 47 percent of those starting a new business consider this a part-time activity.

Employment of Southwest Minnesota residents declined by 0.2 percent over the year ending June 2017. The regional unemployment rate was 3.5 percent in June, a decrease from a 4 percent reading in June 2016. More than 500 fewer initial claims for unemployment insurance were reported compared to year-ago levels in June--a 37.3 percent decrease. The Southwest Minnesota labor force contracted by 0.7 percent over the year ending June 2017 and average weekly wages fell. Bankruptcies have begun to rise in Southwest Minnesota.

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