St. Cloud Area Quarterly Business Report Vol. 20 No. 2

Authors

King Banaian, St. Cloud State UniversityFollow
Richard A. MacDonald, St. Cloud State UniversityFollow

Document Type

Research Study

Publication Date

6-10-2018

Abstract

Despite heightened uncertainty from recent retail store closings, looming na­tional tariff policies and the future clo­sure of Electrolux, area firms continue to report strong optimism about future business activity. Area firms reported continuing difficulty attracting qualified workers, which appears to be restraining local employment growth. Local employ­ment grew at a tepid 0.4 percent rate over the year ending April 2018 as worker shortages limit firms' growth poten­tial. The manufacturing, education/health, wholesale trade, and transportation/warehousing/utilities sectors led local job growth, while the retail trade, mining/logging/construction, and leisure/hospitality sectors' employ­ment contracted.

A new St. Cloud Index of Leading Economic Indicators is unveiled this quarter (see accompanying chart). The index increased 3.2 percent in April, pointing to continuing local economic growth over the next several months. Surveyed firms indicate strong current employment activity and improving na­tional business conditions. Firms also report an increase in prices received.

KEY TAKEAWAYS

1) Private sector payroll employment in the St. Cloud area rose by 0.2 percent from one year earlier in the 12 months through April 2018. Service providing industries (which account for 80.2 percent of local payrolls) are estimated to have had no employment change over the past year. This is largely attributed to a year-over-year decline in employment in the retail trade and lei­sure/hospitality sectors of the local economy. Employment in these two sectors contracted by 4.2 percent and 9.5 percent, respectively, over the year ending April 2018. Combined, these two sectors account for nearly 20 percent of local jobs. The unemployment rate in the St. Cloud area in April fell to 3.3 per­cent from 3.7 percent a year ago. This is the lowest April unemployment rate since 2000. The labor force rose by 3 percent in the St. Cloud area over the past year.

2) Employment in the health and educational sector grew by 3.3 per­cent over the year ending April 2018. As has been noted in previous re­ports, this sector now accounts for 20.5 percent of area employment (versus 13.9 percent in April 2000). Annual local job growth in the wholesale trade sector was 3 percent and manufacturing employ­ment is estimated to have increased by 3.8 percent over the last twelve months (we note the irony that Electrolux has been hiring workers in recent weeks in an effort to reach increased production goals). Job growth in the transportation/warehousing/utilities sector was 4.2 percent and government sector employ­ment rose by 1.9 percent over the past year. Sectors experiencing job gains rep­resented nearly 69 percent of area em­ployment over the past year. In addition to the loss of jobs in the retail trade and leisure/hospitality sectors that are referenced above, the mining/logging/con­struction sector (most of this sector is construction locally) shed 1.7 percent of its jobs over the past year. This had recently been one of the fastest growing local sectors, so we will keep an eye on these numbers in the coming months.

3) The new St. Cloud Index of Lead­ing Economic Indicators rose 3.2 percent in April and the St. Cloud 13 Stock Price Index fell 6.2 percent over the three months ending April 30, 2018. Over this same period, the S & P 500 fell 1.9 percent.

4) The future outlook of those area businesses responding to the St. Cloud Area Business Outlook Survey is solid. Fifty-one percent of sur­veyed firms expect an increase in busi­ness activity over the next six months, while only 12 percent expect decreased activity. Forty-one percent of surveyed firms expect to expand payrolls by November and 56 percent anticipate high­er employee compensation. Most read­ings from the future outlook survey are stronger than one year ago, with particularly strong performance of the em­ployment, national business activity, prices received and worker shortage in­dexes. Forty-two percent of surveyed firms expect increased difficulty attract­ing qualified workers by November.

5) Forty-one percent of surveyed firms expect to be either directly or indirectly unfavorably impacted by the imposition of tariffs by the Trump administration. Another 41 per­cent expect "no effect" of the tariffs and only 9 percent of firms thlnk this will fa­vorably impact them. In a second spe­cial question, 70 percent of surveyed firms expect "neither net gain nor loss" from an expansion of the Northstar Cor­ridor Commuter Rail service from Big Lake to St. Cloud. Seventeen percent of firms expect to receive a net gain from the expansion of this service, while sev­en percent would expect a net loss. In this quarter's final special question, we asked area firms to express their con­cerns about the recent wave of store closings to hit the St. Cloud area. Forty-­five percent of firms express a small concern and 36 percent have a medium concern. This is a large concern for 14 percent of surveyed companies.

Recommended Citation

Banaian, King and MacDonald, Richard A., "St. Cloud Area Quarterly Business Report Vol. 20 No. 2" (2018). St. Cloud Area Quarterly Business Report. 78.
https://repository.stcloudstate.edu/scqbr/78