Northwest Minnesota Economic and Business Conditions Report
 

Publication Title

Northwest Minnesota Economic and Business Conditions Report

Document Type

Research Study

Publication Date

6-13-2019

Financial Year

2018

Abstract

Slower 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). Only one of the five index components increased in the most recent quarter as the LEI fell by 3.65 points. The decline in the leading index was largely caused by a reduction in the number of residential building permits in Fargo/Moorhead and Grand Forks/East Grand Forks. Higher regional initial jobless claims and weakening in a national consumer sentiment index also weighed on the future Northwest Minnesota economic outlook. A rise in the Rural Mainstreet Index (which signals a more robust macroeconomic environment for rural America) was the only index component with a positive value in the fourth quarter.

There were 1,039 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the fourth quarter of 2018 — representing a 0.6 percent increase over one year ago. With 86 filings, there were 13.1 percent fewer new filings for business incorporation in the fourth quarter compared to the same period last year. New LLC filings in Northwest Minnesota were up 8.4 percent from one year earlier—rising to 593. New assumed name filings totaled 327 in the fourth quarter—0.3 percent fewer filings than the same period in 2017. There were 33 new filings for Northwest Minnesota non-profit in the fourth quarter—twenty-six fewer filings than one year ago.

Sixty percent of new business filers in the Northwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in the fourth quarter. Results of this voluntary survey indicate that 5.5 percent of new filers come from communities of color. Approximately 7.1 percent of new filers in Northwest Minnesota are veterans. About 2.7 percent of new filers come from the disability community and only 2.1 percent of new filings in Northwest Minnesota are made by the immigrant community. Forty-two percent of new business filings in Northwest Minnesota in the fourth 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 65 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, and other services. Employment levels at most new firms are between 0 and 5 workers, and 48 percent of those starting a new business consider this a part-time activity.

Employment of Northwest Minnesota residents increased by 0.9 percent over the year ending December 2018. The regional unemployment rate was 4.7 percent in December, which was somewhat lower than the 5 percent rate observed one year ago. Initial claims for unemployment insurance in December 2018 were 3.4 percent higher than one year earlier and the Northwest Minnesota labor force increased by 0.5 percent. The average weekly wage in the Northwest Minnesota planning area was 3.8 percent higher than one year earlier. Northwest Minnesota’s total bankruptcies were 2.9 percent higher than one year ago.

Economic performance in the Fargo/Moorhead Metropolitan Statistical Area (MSA) was mostly favorable in the past quarter. This MSA tallied a small increase in overall employment (as well as job gains in the manufacturing sector), increased average hourly earnings, a rise in the value of residential building permits, a lower relative cost of living, fewer initial jobless claims, higher average weekly work hours, and a lower unemployment rate. The only negative indicators in Fargo/Moorhead were a decrease in the MSA labor force and a drop in employment in the key mining/logging/ construction sector. Economic activity in the Grand Forks/East Grand Forks MSA was mixed in the fourth quarter. Declining overall employment (and unchanged employment in the key manufacturing and mining/logging/construction sectors) and a falling labor force weighed on the area economic outlook. An increase in average hourly earnings, a rise in average weekly work hours, a lower unemployment rate, an increase in the value of residential building permits, fewer regional initial jobless claims, and a lower relative cost of living in the metro area helped lift the Grand Forks/East Grand Forks economic outlook.

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