June 12, 2002 Federal Reserve Districts Ninth District - Minneapolis

Skip to content Summary Districts Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Full report

Overall economic activity in the Ninth District is mixed. Agriculture and commercial construction are down slightly and consumer spending is level. Meanwhile, the residential construction, manufacturing, energy and mining sectors are up somewhat. Tourism businesses are optimistic for the summer season. From mid-April through May, labor markets loosened slightly, while overall wages and prices increased modestly. However, significant price increases in steel, insurance and college tuition were noted. Construction and Real Estate Commercial construction is down slightly from a year ago. Contracts awarded for heavy construction projects in Minnesota and the Dakotas decreased 1 percent during the three-month period ending in April compared with last year. Sales and rentals were down somewhat in April compared with last year at a Minneapolis area construction equipment dealer, primarily due to unfavorable weather conditions, according to the store manager. Commercial construction in April and early May appears to be a little slower than a year ago in the Billings, Mont., area, according to a building official. District home building is somewhat higher than last year. District housing units authorized were up 15 percent for the three-month period ending in April compared with a year earlier. In Billings recent residential construction activity was fairly consistent with last year. In contrast, in Minneapolis-St. Paul vacancy rates for apartment buildings have doubled compared with a year earlier. Pending sales for new homes in Minneapolis-St. Paul decreased about 3 percent in April compared with last year. Consumer Spending and Tourism Consumer spending is about level with a year earlier. A major Minneapolis-based department store retailer reported that overall same-store sales in April were 0.4 percent higher compared with a year earlier. A Minnesota-based leather products retailer reported that same-store sales at its core chain stores were up 1.3 percent in April compared with a year ago. Sales were down about 4 percent at a Minneapolis area mall in April from last year, primarily due to soft sales in men's apparel. A Minnesota mall manager reported flat same-store sales in April compared with a year ago, while a North Dakota mall reported a 4 percent increase. April sales at a Montana mall were up 1 percent compared with a year ago, with flat sales in May, according to the mall manager. An auto dealer association representative reported solid auto sales in April in South Dakota, except at some dealerships in rural areas, where sales were slow. Tourism businesses are optimistic for the summer season. Tourism activity in Montana for 2002 is expected to increase 2 percent over last year, according to a tourism official. A North Dakota tourism official noted that tourism businesses are optimistic for the summer season as many travelers are expected to remain closer to home. Visits at Mount Rushmore in South Dakota were up 27 percent in April compared with a year ago. However, crossings at the International Bridge in Sault Ste. Marie, Mich., decreased 14 percent in April compared with last year. Manufacturing Manufacturing activity edged up. A May survey of purchasing managers by Creighton University (Omaha, Neb.) indicated robust increases in manufacturing activity in South Dakota and slight increase in activity in North Dakota and Minnesota. In North Dakota, a data storage company recently added space to a production facility. A cabinetry plant in South Dakota plans to expand output. In Minnesota, a medical device manufacturer recently reported strong demand, while some metal fabricators reduced output due to foreign competition and shortages of steel. Due to favorable aluminum and electricity prices, an aluminum smelter in Montana recalled workers in May and opened up additional potlines. A plastic molding plant in the Upper Peninsula reported brisk May sales and production, especially for automotive components. A hardwood lumber mill in northern Wisconsin recently reported steady demand, while a drill factory in northern Wisconsin will close. Mining and Energy Activity in the energy and mining sectors is up slightly. Late-May district oil and natural gas exploration levels were up slightly compared with mid-April levels. Meanwhile, the iron ore industry is expanding, as a mine in the Upper Peninsula recently increased output and employment to full production. Agriculture The drought continues in Montana, and livestock prices dipped; however, the farm bill will aid the agricultural sector. The U.S. Department of Agriculture authorized the emergency grazing on Conservation Reserve Program acres in Montana in an effort to provide relief in areas hardest hit by drought conditions. Late-May livestock prices decreased about 5 percent from early April levels. The recently signed farm bill will subsidize producers in 2002 by an estimated $1.2 billion in Minnesota, $676 million in North Dakota and $606 million in South Dakota. Employment, Wages, and Prices Labor markets loosened slightly during the past six weeks due to layoffs; however, some companies have announced expansions in payrolls. Recent plans to close four advanced circuit facilities in the Minneapolis-St. Paul area will result in 900 job losses. An electronics-design firm will lay off 100 people in Minneapolis. A major computer firm announced 150 layoffs in Rochester, Minn. About 25 percent fewer employers attended a recent job fair in Eau Claire, Wis., due to a decreased number of job openings in the area. A total of about 3,500 roofers and pipefitters recently went on strike in Minneapolis-St. Paul. Employment agencies have reported that companies are frequently hiring temporary workers vs. filling permanent positions. According to a recent poll by a staffing company, 30 percent of respondents in Minneapolis-St. Paul plan to increase payrolls during the summer, while 11 percent expect to decrease staffing levels, compared with 34 percent and 9 percent of respondents, respectively, in last year's survey. In addition, a major Minnesota-based airline plans to recall 135 full-time mechanics and 670 full- and part-time ground workers for temporary summer positions. A call center in Fargo, N.D., has recently added 80 jobs and plans to add 25 more by year-end. Overall wage increases are moderate. Hourly wages for district manufacturing workers increased 3.2 percent for the three-month period ending in April. However, according to the results of a March St. Cloud Area Quarterly Business Report survey, 61 percent of respondents in central Minnesota expect employee compensation to increase by September, up from 55 percent in the previous year's survey. Several hospitals in the Minneapolis-St. Paul area have offered signing bonuses of up to $10,000 for top nurses. Price increases are modest. Apartment rental rates have flattened, while significant increases were noted in steel, insurance and tuition. After apartment rental rates increased more than 10 percent at an annual rate about a year ago in the Minneapolis-St. Paul area, landlords say rents will increase by a small amount or remain flat over the next several months. The price of domestic steel has recently increased up to 30 percent. A South Dakota trucking company representative said that insurance costs for his firm have recently increased more than 50 percent. Tuition will increase about 10 percent at Minnesota state colleges and universities this fall. Return to top St. Louis Kansas City