St. Cloud Area Quarterly Business Report

Document Type

Article

Publication Date

Summer 6-2021

Abstract

The St. Cloud area economy is poised to exit recession as a variety of indicators suggest a broad-based recovery is on the horizon. While year-over-year data comparisons are now complicated by the historic decline in economic activity that occurred twelve months ago, there are signs that the pace of local economic activity continues to improve for many area firms. The pandemic has created scars in the local economy that will likely persist for months and years to come, but many area firms now seem to be experiencing challenges that are typically associated with rapid expansion—labor shortages, price increases, accelerating wage growth, etc. Employment data released by the Minnesota Department of Employment and Economic Development (DEED) indicate St. Cloud area employment increased 7.8 percent over the twelve months ending April 2021 but is still 4.4 percent below its pre-pandemic level of February 2020. Much of the recent job growth has come in three sectors that were most impacted by COVID-19 social distancing requirements: leisure & hospitality; other services; and retail trade. Current employment in these three sectors is still 3,128 lower than it was in April 2019. There is considerable upside potential for job gains in these three areas.

The St. Cloud Index of Leading Economic Indicators rose 2.0% in the recent period as the local economy is expected to improve from the weak numbers that have been seen since the onset of recession. Current business activity at surveyed firms surged compared to three months ago. 62 percent of surveyed firms report an increase in business activity over the past three months and only 14 percent of firms experienced a decrease in activity over the past quarter. The future outlook of surveyed firms is also improved as local companies expect better business conditions over the next six months.

In special questions, three-fourths of surveyed firms have not offered any incentives for their employees to receive a COVID-19 vaccine and 62 percent of firms have not attempted to verify which of their employees have received the vaccine. Many surveyed firms also indicate it has become more difficult to find workers because of increased unemployment compensation. For example, 60 percent of survey respondents indicate their applicant pool is smaller than it was last fall (at a time that more generous unemployment compensation benefits were phased out). Firms also report considerable supply chain issues. A majority of surveyed firms expect supply chain issues to continue or worsen in the coming months. Finally, in written responses, area firms explain how their business practices have been permanently altered by COVID-19.

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