Northeast Minnesota Economic and Business Conditions Report

Document Type

Research Study

Publication Date



A steady pace of economic growth in Northeast Minnesota is expected over the next several months according to the predictions of the Northeast Minnesota Index of Leading Economic Indicators (LEI). Two of the five components of the LEI increased as the overall index was basically flat in the fourth quarter. A surge in Duluth metropolitan area residential building permits and lower initial jobless claims in the region contributed favorably to this quarter’s outlook, while weakness in a general measure of statewide business conditions, a lower reading on a supply manager’s index, and declining new business incorporations weighed on the leading index.

There were 507 new business filings with the Office of the Minnesota Secretary of State in Northeast Minnesota in the fourth quarter of 2017 — representing a 2.2 percent increase from one year earlier. Forty-two new regional business incorporations were filed in the fourth quarter—12.5 percent fewer than in the same period of 2016. New limited liability company (LLC) filings in Northeast Minnesota rose 10.7 percent to a level of 300. New assumed name filings decreased 7.7 percent and there were 22 new filings for non-profit—no change compared to one year earlier.

Sixty-six percent of new business filers in the Northeast Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s fourth quarter. Results of this voluntary survey indicate that 3 percent of new filers come from communities of color, while 7.8 percent of new filings come from veterans. Three percent of new filers come from the disability community and less than 1 percent of new filings are made by the immigrant community. Forty-four percent of new business filings in Northeast Minnesota in this year’s fourth quarter were initiated by women. MBS results also show that most new business filers in Northeast Minnesota have between 0 and $10,000 in annual gross revenues (although 35 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Northeast Minnesota are construction, retail trade, professional/scientific/technical, real estate/rental/leasing, arts/ entertainment/recreation, and other services. Employment levels at most new firms are between 0 and 5 workers, and more than half of those starting a new business consider this a part-time activity.

Northeast Minnesota employment was 2.9 percent higher than year ago levels in December. The regional unemployment rate was 5.0% (considerably lower than one year ago) and the labor force rose by 1.5% from one year earlier. December 2017 initial claims for unemployment insurance were nearly 18.2 percent lower than the same month last year. Due to a statistical anomaly, the region’s average weekly wages fell in the third quarter of 2017 compared to one year earlier. Annual bankruptcies in Northeast Minnesota continue to inch up.

Economic activity in the Duluth/Superior Metropolitan Statistical Area (MSA) was mostly favorable. Northeast Minnesota’s largest market experienced a 2.1 percent increase in overall employment over the year ending December 2017, and education/health and manufacturing sector employment also rose. The area unemployment rate fell to 4.3 percent and the labor force rose 2.2 percent. Average weekly work hours fell 1.2 percent and average hourly earnings declined. The value of residential building permits jumped 94.7 percent compared to December 2016.



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