March 6, 2002
Federal Reserve Districts
|Skip to content
Overall economic activity in the Ninth District appears to have edged up in recent months. Residential construction and mining activities are up slightly. The commercial construction, tourism and energy sectors have slowed. Meanwhile, the consumer spending, manufacturing and agriculture sectors are mixed. From early January to mid-February, labor markets loosened slightly, while overall wages and prices were stable. However, decreases in some construction materials prices and increases in home prices and insurance premiums were noted.
Construction and Real Estate
District home building is solid. Home permits in the Minneapolis-St. Paul area were up 7 percent in January compared with a year earlier, with strength particularly noted in multi-family construction. According to residential construction officials in Sioux Falls, S.D., home builders are expected to be busy in 2002, but the year is likely to finish somewhat slower than the previous two record-breaking years. A contractor in Bismarck, N.D., expects to build 25 percent more housing in 2002 compared with a year earlier. Bank directors reported that the outlook for residential construction is optimistic for the upcoming year, with softness noted in the high-end housing market in Montana.
Consumer Spending and Tourism
In contrast, a St. Paul area mall manager noted slightly less traffic in January and February compared with last year. A Helena branch bank director reported slow February traffic at a Montana mall compared with a year ago. A Minnesota-based leather products retailer said that same-store sales in January were down 17 percent compared with last year. Auto sales in Minnesota slowed in January and February, according to a representative of an auto dealers association.
Little snowfall and warm weather has halted winter tourism activities in many areas. Some businesses in the Upper Peninsula of Michigan expect the season to be off as much as 40 percent to 50 percent due to poor snowmobiling conditions. A tourism official in South Dakota estimated ski activity down 45 percent and snowmobiling down 70 percent this year compared with a year ago. However, traffic at Mount Rushmore, considered a "fair weather" attraction, set monthly attendance records from October through January. A ski resort in Montana reported good snow conditions this year and an increase in visits over last year.
Mining and Energy
Employment, Wages, and Prices
As a marker of looser labor markets, a Minnesota company recently reported a 70 percent acceptance rate of offers made to applicants for open positions, an increase from a historical average of 50 percent. Initial claims for unemployment insurance in Minnesota were up 28 percent in January compared with a year earlier, including a large increase in claims from the construction sector.
In contrast, a computer company is planning to hire 100 employees in North Dakota. Furthermore, U.S. Customs will add 39 jobs at North Dakota's border with Canada. A call center in northern Minnesota will add 65 more workers.
Wage increases are modest. St. Paul public school teachers recently agreed to a 2 percent increase in pay; the overall wage and benefit package was considered average compared with recent contracts, according to a union official. In contrast, according to the results of a December St. Cloud Area Quarterly Business Report survey, 55 percent of respondents in central Minnesota expect increases in employee compensation by June.
Price increases are moderate, with price decreases noted in some construction materials and increases in home prices and insurance rates. Recent steel and cement prices have decreased slightly from a year earlier. Meanwhile, the median price of homes recently sold in Minneapolis-St. Paul is up 12 percent compared with a year earlier. Some home insurance premiums during the past two months are 10 percent to 30 percent higher than last year in North Dakota, according to an official.