Southwest Minnesota Economic and Business Conditions Report
The St. Cloud State University Southwest Minnesota Index of Leading Economic Indicators (LEI) continued to bounce around as the second quarter LEI turned negative after recording a strong positive value in the first quarter of the year. Despite the negative reading in the second quarter, economic fundamentals in this part of the state appear to point to continued steady growth over the next several months. Two of four LEI components were positive in the second quarter as a stronger outlook for rural Minnesota and higher Mankato area residential building permits led the way. The most significant negative component of this quarter’s leading index was a rise in initial jobless claims in the region.
There were 706 new business filings with the Office of the Minnesota Secretary of State in Southwest Minnesota in the second quarter of 2018 — representing 3.7 percent more new filings than one year ago. There were 46 new regional business incorporation filings in the second quarter, a 19.3 percent decrease from last year’s second quarter. New LLC filings in Southwest Minnesota rose 8.2 percent from one year earlier, but new assumed name filings contracted to 193—a 4 percent year-over-year decline. There were 32 new filings for Southwest Minnesota non-profit in the second quarter— eleven more filings than one year ago.
Sixty percent of new business filers in the Southwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s second quarter. Results of this voluntary survey indicate that 4.5 percent of new filers come from communities of color. Approximately 4.9 percent of new business filings are from veterans. About 0.5 percent of new filers come from the disability community and 3.8 percent of new filings are made by the immigrant community. Thirty-three percent of new business filings in Southwest Minnesota in this year’s second 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 44 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Southwest Minnesota are retail trade, construction, real estate/rental/leasing, and other services. Employment levels at most new firms are between 0 and 5 workers, and 47 percent of those starting a new business consider this a part-time activity.
Employment of Southwest Minnesota residents increased by 2.8 percent over the year ending June 2018. The regional unemployment rate was 2.9 percent in June, a decrease from a 3.5 percent reading in June 2017. Initial claims for unemployment insurance were 25.6 percent higher than year-ago levels in June. Average weekly wages in this part of the state totaled $808, which is 4.3 percent higher than what was seen one year earlier. The Southwest Minnesota labor force rose 2.2 percent over the year ending June 2018. Regional bankruptcies declined over the last 12 months.
Economic performance in the Mankato/North Mankato Metropolitan Statistical Area (MSA)—the largest market in Southwest Minnesota—was strong in the most recent quarter. Employment rose, the unemployment rate was lower, average hourly earnings surged, the labor force expanded, new business filings were higher, average weekly work hours increased, and the value of building permits rose. The only data measures that clouded the outlook in this metropolitan area were a slight rise in initial jobless claims and a small increase in the relative cost of living.
Banaian, King and MacDonald, Richard, "Southwest Minnesota Economic and Business Conditions Report Second Quarter 2018" (2019). Southwest Minnesota Economic and Business Conditions Report. 18.