Southwest Minnesota Economic and Business Conditions Report
 

Document Type

Research Study

Publication Date

3-2018

Abstract

After experiencing a negative reading in the fourth quarter of 2017, the St. Cloud State University Southwest Minnesota Index of Leading Economic Indicators (LEI) turned positive in this year’s first quarter, indicating continued economic growth in Southwest Minnesota over the next several months. Three of four LEI components were positive in the first quarter. A larger number of new business filings of incorporation and LLC in Southwest Minnesota and a stronger outlook for rural Minnesota helped drive the leading index higher in the current quarter. A decline in initial jobless claims also helped lift the index. A decrease in the value of residential building permits in the Mankato area served as a drag on this quarter’s LEI.

There were 766 new business filings with the Office of the Minnesota Secretary of State in Southwest Minnesota in the first quarter of 2018 — representing 2.7 percent fewer new filings than one year ago. There were 43 new regional business incorporation filings in the first quarter, a 29.5 percent decrease from last year’s first quarter. New LLC filings in Southwest Minnesota rose 6.7 percent from one year earlier, but new assumed name filings contracted to 213—a 9.7 percent reduction from its level of March 2017. There were 34 new filings for Southwest Minnesota non-profit in the first quarter—ten fewer filings than one year ago.

Fifty-six percent of new business filers in the Southwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s first quarter. Results of this voluntary survey indicate that 4.6 percent of new filers come from communities of color. Approximately 6.3 percent of new business filings are from veterans. About 2.6 percent of new filers come from the disability community and 2.8 percent of new filings are made by the immigrant community. Thirty-eight percent of new business filings in Southwest Minnesota in this year’s first quarter were initiated by women. MBS results also show that most new business filers in Southwest Minnesota have between 0 and $10,000 in annual gross revenues (although 54 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Southwest Minnesota are retail trade, construction, agriculture/forestry/fishing/hunting, real estate/rental/leasing, 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 Southwest Minnesota residents increased by 1.7 percent over the year ending March 2018. The regional unemployment rate was 4.3 percent in March, a decrease from a 4.7 percent reading in March 2017. Initial claims for unemployment insurance were 6.5 percent lower than year-ago levels in March. Job vacancies continue to rise in the Southwest region. There are now 125 job vacancies for every 100 unemployed workers in this part of the state. The Southwest Minnesota labor force rose 1.2 percent over the year ending March 2018. Regional bankruptcies were slightly higher over the last 12 months.

Economic performance in the Mankato/North Mankato Metropolitan Statistical Area (MSA)—the largest market in Southwest Minnesota—was mixed in the most recent quarter. Employment rose, the unemployment rate was lower, average hourly earnings rose, the size of the labor force expanded, and new business filings were higher. Offsetting this was a decline in average weekly work hours, an increase in initial jobless claims, a decrease in the value of Mankato/North Mankato MSA residential building permits, and a rise in the average cost of living.

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