April 26, 2006
Federal Reserve Districts
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The Ninth District economy grew at a solid pace since the last report. Increases in activity were noted in consumer spending, manufacturing, tourism, mining, agriculture, construction, and commercial real estate. Meanwhile, residential real estate softened. Overall employment levels and wages increased modestly. Significant price increases were noted in gasoline and some construction materials.
Consumer Spending and Tourism
Recent vehicle sales were generally lower than a year ago in Montana, according to a representative of an auto dealers association. After slow vehicle sales in South Dakota during January and February, sales in March and early April showed some signs of improvement, according to a representative of an auto dealers association.
The winter tourism season finished solid in several parts of the district. Downhill ski resorts in Montana reported deep snow pack and late season lift ticket sales above a year ago. Tourism destinations in eastern Montana also reported that visits were up compared with last year. A chamber of commerce representative in northwestern Wisconsin noted that the winter tourism season finished stronger than last year. Recent hotel room occupancy rates in Minneapolis have trended upward as corporate convention business has shown signs of strengthening.
Construction and Real Estate
Commercial real estate was strong. The Minneapolis-St. Paul office market continued to grow, with a market research firm predicting growth in absorption through 2007 with little increase in supply. Meanwhile, the industrial market there is heating up, with increased absorption. In contrast, residential real estate softened. Realtors in Fargo, N.D., reported March closed sales down 2 percent last year and an increase in listings. New listings in the Minneapolis area were up 47 percent over last year, but buying activity was level and time on the market trended upward.
Energy and Mining
Employment, wages and prices
Some companies announced upcoming staff reductions. A slowdown at a motor vehicle plant in St. Paul could result in at least 150 layoffs during the summer. Also in Minnesota, a consumer electronics retailer recently announced the elimination of 300 positions at its corporate headquarters and an investment bank recently announced plans to reduce staff by 350 positions following a purchase of the company.
Overall wage increases were moderate. Aside from notable increases in certain trades, overall wage increases were modest, said a Montana bank director. According to results of a recent St. Cloud (Minn.) Area Business Outlook Survey, 50 percent of respondents expect to increase employee compensation over the next six months. In the same survey a year ago, 54 percent of respondents anticipated increases.
Significant price increases were noted in gasoline and some construction materials. Minnesota gasoline prices in the middle of April were up about 45 cents per gallon from February and almost 50 cents per gallon from a year ago. Price increases for construction materials include lumber, concrete, aluminum, and some steel products. Copper prices in April were more than 50 percent higher than levels in 2005.