September 9, 2009
Federal Reserve Districts
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Overall economic activity in the Ninth District was flat since the last report. Modest decreases in activity occurred in consumer spending, agriculture, and commercial real estate and construction. Tourism was mixed, while activity in services and residential construction was flat. The manufacturing, energy, mining and residential real estate sectors saw moderate increases. Labor markets were mixed, and wage increases were subdued. Prices remained relatively stable since the last report.
Consumer Spending and Tourism
The cash-for-clunkers program jump-started auto sales across the District. A representative of an auto dealers association in North Dakota reported that most recent activity at showrooms was associated with the program. Auto inventories were low in Minnesota as a result of rebate-driven sales, according to a representative of an auto dealers association. Contacts noted some concern about the program's impact on future sales--that the incentives drove sales that would have occurred in the fall into a condensed period of time.
Tourism was mixed, as visitor numbers were solid, but spending was soft in some areas. The number of visitors in July to Yellowstone National Park was up 11 percent compared with a year ago; however, spending at nearby restaurants and retail stores has been slow. Visits to attractions and overall highway traffic were up about 10 percent compared with a year ago in western South Dakota, while business at hotels was flat, according to a tourism official.
Construction and Real Estate
Commercial real estate was weak. According to a commercial real estate firm in Minneapolis-St. Paul, retail vacancy reached its highest level on record; industrial absorption was at record lows. A commercial broker in Fargo, N.D., said market activity there was stable though slightly lower than in recent years. Residential real estate showed continued improvement. July home sales in Minneapolis-St. Paul were up 16 percent from a year earlier, but median sale prices were down 18 percent. Home sales also increased in Duluth, Minn.; however, they decreased in Sioux Falls, S.D., and Michigan's Upper Peninsula. Meanwhile, sales of vacation properties were down significantly from last year across the District, particularly in western Montana.
Energy and Mining
Employment, Wages, and Prices
In contrast, month-to-month gains in employment were recorded in Minnesota, Montana and South Dakota during July. Federal economic stimulus funds have created a number of road construction jobs. For example, the state of Montana estimated that stimulus spending created 140 jobs by the end of July, which does not include any indirect jobs at businesses that provide goods and services to construction projects and construction workers. In North Dakota, 120 workers will be added to a coal-fired power plant construction project during late August and September.
Wage increases were subdued. For example, the state of Montana has frozen wages for two years. Several architectural firms reported decreased employee compensation.
Prices remained relatively stable since the last report. Minnesota gasoline prices were only slightly higher at the end of August compared with early July, but were $1.15 per gallon lower than a year ago. Tuition will increase about 5 percent this fall at Minnesota state colleges and universities; federal stimulus dollars will cover 2 percentage points of that increase. Metal prices increased a tad during July, but remained mostly level during the month of August; metal product prices were well below year-ago levels.