Northwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

3-2018

Abstract

Strong economic growth is expected in the Northwest Minnesota planning area over the next several months according to the predictions of the St. Cloud State University Northwest Minnesota Index of Leading Economic Indicators (LEI). Four of five index components increased in the most recent quarter as the LEI rose 7.02 points. An increase in the Rural Mainstreet Index (which signals a more robust macroeconomic environment for rural America) and a larger number of residential building permits in Fargo/Moorhead and Grand Forks/East Grand Forks were among the positive components in this quarter’s leading index. A rise in the number of new filings for LLC and incorporation in Northwest Minnesota and improved consumer sentiment also helped lift the LEI in the first quarter.

There were 1,315 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the first quarter of 2018 — representing a ten percent increase from one year ago. With 113 filings, there were 6.6 percent fewer new filings for business incorporation in the first quarter compared to the same period last year. However, new LLC filings in Northwest Minnesota were up 10.8 percent from one year earlier—rising to 721. New assumed names totaled 423 in the first quarter—10.4 percent more filings than the same period in 2017. There were 58 new filings for Northwest Minnesota non-profit in the first quarter—eighteen more filings than one year ago.

Sixty-one percent of new business filers in the Northwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s first quarter. Results of this voluntary survey indicate that about 3.3 percent of new filers come from communities of color. Approximately 9 percent of new filers in Northwest Minnesota are veterans. About 2.6 percent of new filers come from the disability community and 2.4 percent of new filings in Northwest Minnesota are made by the immigrant community. Thirty-nine percent of new business filings in Northwest Minnesota in this year’s first quarter were initiated by women. MBS results also show that most new business filers in Northwest Minnesota have between 0 and $10,000 in annual gross revenues (although 123 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Northwest Minnesota are construction, retail trade, real estate/rental/leasing, professional/scientific/technical, agriculture/forestry/fishing/hunting 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 Northwest Minnesota residents increased by 3.5 percent over the year ending March 2018. The regional unemployment rate was 5.5 percent in March, which was considerably lower than the 6.3 percent rate observed one year ago. Initial claims for unemployment insurance in March 2018 were 8.4 percent lower than one year earlier and the Northwest Minnesota labor force increased by 2.7 percent. Job vacancies remain high in the region. For every 100 unemployed workers, there are 78 job vacancies. Northwest Minnesota’s total bankruptcies were unchanged from one year ago.

Economic performance in the Fargo/Moorhead Metropolitan Statistical Area (MSA) was mostly favorable in the past quarter. This MSA tallied gains in overall employment (as well as job gains in the key mining/logging/construction and manufacturing sectors), lower initial jobless claims, a rise in the regional workforce, and increased average hourly earnings. The area did experience reduced valuation of residential building permits, a decrease in average weekly work hours, a higher unemployment rate, and a higher relative cost of living. Economic activity in the Grand Forks/East Grand Forks MSA was mixed in the first quarter. Lower overall employment (and unchanged employment in the mining/logging/construction and manufacturing sectors), a falling labor force, and increased initial jobless claims had a negative impact on the region’s economic outlook. A slightly lower unemployment rate, an increase in average hours worked and hourly earnings, and a surge in the valuation of residential building permits contributed favorably to the area’s economic performance.

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