Northwest Minnesota Economic and Business Conditions Report
Continued steady 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). Three of five index components increased in the most recent quarter as the LEI fell by a modest 0.97 points. The decline in the leading index was largely caused by a fall in the Rural Mainstreet Index (which signals a less robust macroeconomic environment for rural America). A small decline in the number of residential building permits in Fargo/Moorhead and Grand Forks/East Grand Forks also helped drive the LEI lower. Among the positive components in this quarter’s leading index were a rise in the number of new filings for LLC and incorporation in Northwest Minnesota, lower regional initial jobless claims, and an improvement in a national consumer sentiment index in the third quarter.
There were 1,010 new business filings with the Office of the Minnesota Secretary of State in Northwest Minnesota in the third quarter of 2018 — representing a 2.7 percent increase from one year ago. With 100 filings, there were 19 percent more new filings for business incorporation in the third quarter compared to the same period last year. In addition, new LLC filings in Northwest Minnesota were up 5 percent from one year earlier—rising to 565. New assumed name filings totaled 294 in the third quarter—9.5 percent fewer filings than the same period in 2017. There were 51 new filings for Northwest Minnesota non-profit in the third quarter—fifteen more filings than one year ago.
Sixty-five percent of new business filers in the Northwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s third quarter. Results of this voluntary survey indicate that 5 percent of new filers come from communities of color. Approximately 8.3 percent of new filers in Northwest Minnesota are veterans. About 2.4 percent of new filers come from the disability community and only 1.1 percent of new filings in Northwest Minnesota are made by the immigrant community. Forty-six percent of new business filings in Northwest Minnesota in this year’s third 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 68 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, and other services. Employment levels at most new firms are between 0 and 5 workers, and 51.4 percent of those starting a new business consider this a part-time activity.
Employment of Northwest Minnesota residents increased by 1.4 percent over the year ending September 2018. The regional unemployment rate was 2.3 percent in September, which was considerably lower than the 3 percent rate observed one year ago. Initial claims for unemployment insurance in September 2018 were 14.2 percent lower than one year earlier and the Northwest Minnesota labor force increased by 0.8 percent. The number of job vacancies per 100 unemployed in the Northwest Minnesota planning area was 128.1 in the most recent quarter, reflecting the extreme labor shortage that is being experienced around the state. Northwest Minnesota’s total bankruptcies were little changed from one year ago.
Economic performance in the Fargo/Moorhead Metropolitan Statistical Area (MSA) was mostly favorable in the past quarter. This MSA tallied an increase in overall employment (as well as job gains in the key mining/logging/construction and manufacturing sectors), increased average hourly earnings, a rise in the value of residential building permits, lower initial jobless claims, and higher average weekly work hours. The only negative indicators in Fargo/Moorhead were a decrease in the MSA labor force and an associated small rise in the area unemployment rate. Economic activity in the Grand Forks/East Grand Forks MSA was also mostly favorable in the third quarter. Higher overall employment (and increased employment in the key manufacturing and mining/logging/construction sectors), an increase in average hourly earnings, a rise in average weekly work hours, and lower initial jobless claims also helped improve the regional outlook in this metro area. Grand Forks/East Grand Forks did experienced a reduction in its labor force, an unchanged unemployment rate, and a fall in the value of residential building permits.
Banaian, King and MacDonald, Richard, "Northwest Minnesota Economic and Business Conditions Report Third Quarter 2018" (2019). Northwest Minnesota Economic and Business Conditions Report. 20.