Southeast Minnesota Economic and Business Conditions Report
 

Publication Title

Southeast Minnesota Economic and Business Conditions Report

Document Type

Research Study

Publication Date

2-1-2019

Abstract

Steady economic growth over the next several months is expected in the Southeast Minnesota planning area according to the prediction of the Southeast Minnesota Index of Leading Economic Indicators (LEI). After a quarter in which the LEI rose 1.87 points, the leading index rose by 0.77 points in the second quarter as two index components recorded positive values. An increase in the number of Rochester area residential building permits and fewer initial jobless claims helped drive the LEI higher in the second quarter. A decrease in the Minnesota Business Conditions Index and a weakening in consumer sentiment were two components that negatively impacted the leading index.

There were 970 new business filings with the Office of the Minnesota Secretary of State in Southeast Minnesota in the second quarter of 2018 — representing a 9.5 percent increase from one year ago. 53 new regional business incorporations were filed in the second quarter, 12.8 percent more filings than prior year levels. At a level of 594, second quarter new limited liability company (LLC) filings in Southeast Minnesota were 7 percent higher than in the second quarter of 2017. With 283 filings, new assumed name activity was 15.5 percent above what was seen in the same quarter last year. There was one more new filing for Southeast Minnesota non-profit over the last three months compared to one year earlier.

Sixty-three percent of new business filers in the Southeast Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s second quarter. Results of this voluntary survey indicate that 6.2 percent of new filers come from communities of color and 7.4 percent are veterans. Only 2.1 percent of new filers come from the disability community and 4.9 percent of new filings are made by the immigrant community. Thirty-seven percent of new business filings in Southeast Minnesota in this year’s second quarter were initiated by women. MBS results also show that most new business filers in Southeast 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 Southeast Minnesota are retail trade, real estate/rental/leasing, construction and other services. Employment levels at most new firms are between 0 and 5 workers, and 46.6 percent of those starting a new business consider this a part-time activity.

Employment of Southeast Minnesota residents rose by 1.8 percent over the year ending June 2018. The regional unemployment rate was 2.7 percent in June, well below the 3.4 percent level recorded one year earlier. Initial claims for unemployment insurance in June 2018 fell by 10.6 percent from one year earlier and the Southeast Minnesota labor force increased by 1.2 percent. The average weekly wage in Southeast Minnesota was at $969 during the most recent reporting period, 3.2 percent higher than one year earlier. The planning area’s annual bankruptcies continue to rise.

Data from the Rochester area—the largest market in Southeast Minnesota—were mixed. A small increase in overall employment, increased average hourly earnings, a lower unemployment rate, a larger labor force, higher overall new business filings, and declining initial jobless claims favorably impacted the city’s outlook. On the negative side was a yearover- year decline in education/health and manufacturing sector employment, a lower valuation of residential building permits, and lower average weekly work hours.

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