Acceleration of economic growth in Southeast Minnesota is expected over the next several months according to the most recent prediction of the Southeast Minnesota Index of Leading Economic Indicators (LEI). After a quarter in which the LEI experienced a 3.18 point decline, the Southeast Minnesota leading index reversed course by rising 2.34 points in the third quarter of 2016. The increased LEI was led by a rise in the number of residential building permits in Rochester as well as higher new filings of incorporation and LLC in the Southeast Minnesota planning area. Three components of the LEI had negative readings in the current quarter. An increase in initial claims for unemployment benefits, a decline in the Minnesota Business Conditions Index (which serves as a general measure of state business conditions) and weaker consumer sentiment weighed on this quarter’s index.
There were 821 new business filings with the Office of the Minnesota Secretary of State in Southeast Minnesota in the third quarter of 2016 — representing a 2.1 percent increase from one year ago. There were 65 new regional business incorporations in the third quarter, a 5.8 percent reduction from prior year levels. At a level of 519, third quarter new limited liability company (LLC) filings in Southeast Minnesota were 5.1 percent higher than the third quarter of 2015. With 198 filings, new assumed name activity was unchanged from the same quarter in 2015. There were 39 new filings for Southeast Minnesota non-profits over the three months ending September 2016—four fewer filings than one year earlier.
Employment of Southeast Minnesota residents fell by 0.9 percent over the year ending September 2016. Compared to September 2015, 2,415 fewer residents of Southeast Minnesota now have jobs. The regional unemployment rate was 3 percent in September, marginally higher than the 2.8 percent level recorded one year earlier. Initial claims for unemployment insurance in September 2016 were 25.3 percent higher than one year earlier. The Southeast Minnesota labor force contracted by 0.7 percent over the past year. There were 89.04 job vacancies for every 100 people unemployed in the Southeast Minnesota planning area in the second quarter of 2016. The planning area’s bankruptcies continued to fall and have now reached historically low levels.
Data from the Rochester area—the largest market in Southeast Minnesota—were mostly favorable, with an increase in overall employment (along with employment growth in the key health/education sector), higher average hourly earnings, an expanding labor force, higher new business filings, and a surge in the value of residential building permits having a positive impact on the outlook. On the negative side was a shorter workweek, a higher unemployment rate, and increased initial jobless claims.
Banaian, King and MacDonald, Richard A., "Southeast Minnesota Economic and Business Conditions Report - Third Quarter 2016" (2016). Southeast Minnesota Economic and Business Conditions Report. 11.