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 third quarter LEI registered a 10.73 point gain after recording a negative value in the second quarter of the year. This quarter’s positive reading is largely attributed to lower initial jobless claims in the region. Also favorably impacting the leading index were higher new filings of incorporation and LLC in the Southwest Minnesota planning area as well as an increase in the number of residential building permits in the Mankato/North Mankato metropolitan statistical area. A decline in the Rural Mainstreet Index, a statistic that is used to measure the economic outlook for rural Minnesota, was the only LEI component that experienced weakness in the third quarter.
There were 691 new business filings with the Office of the Minnesota Secretary of State in Southwest Minnesota in the third quarter of 2018 — representing 24.3 percent more new filings than one year ago. There were 40 new regional business incorporation filings in the third quarter, an 11.1 percent increase from last year’s third quarter. New LLC filings in Southwest Minnesota surged 32 percent (to a value of 425) from one year earlier and new assumed name filings rose to 187—a 7.5 percent year-over-year increase. There were 39 new filings for Southwest Minnesota non-profit in the third quarter—fifteen more filings than one year ago.
Fifty-four percent of new business filers in the Southwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s third quarter. Results of this voluntary survey indicate that 4.1 percent of new filers come from communities of color. Approximately 3.8 percent of new business filings are from veterans. About 0.6 percent of new filers come from the disability community and 3.2 percent of new filings are made by the immigrant community. Nearly 42 percent of new business filings in Southwest Minnesota in this year’s third 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 34 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, agriculture/forestry/fishing/ hunting, arts/entertainment/recreation, accommodation/food services, professional/scientific/ technical and other services. Employment levels at most new firms are between 0 and 5 workers, and nearly half of those starting a new business consider this a part-time activity.
Employment of Southwest Minnesota residents increased by 0.7 percent over the year ending September 2018. The regional unemployment rate was 2.1 percent in September, a decrease from a 3 percent reading in September 2017. Initial claims for unemployment insurance were 4.1 percent lower than year-ago levels in September. Reflecting the regional and statewide labor shortage, the job vacancy rate surged to 186.2 per 100 unemployed persons in the Southwest Minnesota planning area. The Southwest Minnesota labor force contracted by 0.1 percent over the year ending September 2018. The number of bankruptcies in the region stabilized in the most recent period.
Economic performance in the Mankato/North Mankato Metropolitan Statistical Area (MSA)— the largest market in Southwest Minnesota—was mostly favorable in the most recent quarter. Employment rose, the unemployment rate was lower, average hourly earnings increased, the labor force expanded, new business filings were higher, and the relative cost of living was unchanged. However, there was a small rise in the number of initial jobless claims in the metropolitan area and average weekly work hours fell. There was also a decline in the value of residential building permits in the Mankato area.
Banaian, King and MacDonald, Richard A., "Southwest Minnesota Economic and Business Conditions Report Third Quarter 2018" (2019). Southwest Minnesota Economic and Business Conditions Report. 20.