Northeast Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

3-2018

Abstract

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 decreased as the overall index was basically flat for the second consecutive quarter. A decline in Duluth metropolitan area residential building permits and recently higher initial jobless claims in the region weighed on this quarter’s outlook, while recent strength in a general measure of statewide business conditions and improved new business filings contributed favorably to the leading index.

There were 643 new business filings with the Office of the Minnesota Secretary of State in Northeast Minnesota in the first quarter of 2018 — representing a 2.7 percent increase from one year earlier. Sixty new regional business incorporations were filed in the first quarter—15.5 percent fewer than in the same period of 2017. New limited liability company (LLC) filings in Northeast Minnesota rose 4.9 percent to a level of 362. New assumed name filings increased 9.6 percent and there were 27 new filings for non-profit—6 fewer filings than in the first quarter of 2017.

Sixty-eight percent of new business filers in the Northeast Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s first quarter. Results of this voluntary survey indicate that 3 percent of new filers come from communities of color, while 9 percent of new filings come from veterans. 1.6 percent of new filers come from the disability community and less than 1 percent of new filings are made by the immigrant community. Thirty-nine percent of new business filings in Northeast Minnesota in this year’s first 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 45 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, agriculture/forestry/fishing/hunting 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 5.1 percent higher than year ago levels in March. The regional unemployment rate was 5.4% (considerably lower than one year ago) and the labor force rose by 3.5% from one year earlier. March 2018 initial claims for unemployment insurance were 7.5 percent lower than the same month last year. While the regional job vacancy rate declined from the second quarter of 2017, recent job vacancies still remain elevated relative to the number of unemployed workers in the region. Annual bankruptcies in Northeast Minnesota continue to inch up.

With the exception of a recent year-over-year decline in the value of Duluth area building permits, economic activity in the Duluth/Superior Metropolitan Statistical Area (MSA) was strong. Northeast Minnesota’s largest market experienced a 1 percent increase in overall employment over the year ending March 2018, and education/health and manufacturing sector employment also rose. The area unemployment rate fell to 4.8 percent and the labor force rose 2.6 percent. Average weekly work hours rose 0.3 percent and average hourly earnings increased.

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