The Federal Reserve Board eagle logo links to home page

Beige Book logo links to Beige Book home page for year currently displayed April 26, 2006

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

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
Overall consumer spending increased moderately since the last report. Retail sales were up slightly in March compared with last year's earlier Easter season. A major Minneapolis-based retailer reported same-store sales up 2 percent in March compared with a year ago. A Minneapolis mall manager noted that March traffic was about even with a year ago, with sales up about 2 percent; sales and traffic were brisk on the Friday and Saturday of Easter weekend. Recent sales and traffic at another Minneapolis area mall increased about 2 percent from a year earlier. A mall manager in Montana noted that March apparel and food sales increased from a year ago; overall sales in February increased 10 percent.

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
Overall construction activity grew modestly. Commercial construction contacts surveyed in the district reported year-to-date activity to be higher or about the same compared to last year. Commercial real estate developers in the Upper Peninsula of Michigan expect a stronger construction season this year than in recent years. Commercial building permits were up significantly in number and value over last year in Fargo, N.D., and Rochester, Minn. "We had a good year in 2005; 2006 looks even stronger," said a Minnesota concrete contractor. Year-to-date commercial building activity is up over last year in Minneapolis-St. Paul; however, March home-building permits were down 10 percent in value from a year earlier. March new home permits in Rochester, Minn. were down significantly in value from a year earlier. While year-to-date residential permits were down slightly in Sioux Falls, S.D., developers there announced plans for a 300-acre residential and retail project on the city's east side.

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.

Manufacturing
Manufacturing activity expanded. A March survey of purchasing managers by Creighton University (Omaha, Neb.) indicated fast growth of manufacturing activity in the Dakotas and Minnesota. In Minnesota, a company plans to double the size of a construction equipment component plant, a radiator company plans to build another factory, and a printing company is building a new facility. A control panel manufacturer in the Upper Peninsula is adding manufacturing and warehouse space.

Energy and Mining
Activity increased in the mining sector and was stable at a high level in the energy sector. Nearly all open mines in the district were producing at near full capacity. A mine in Montana is planning to expand capacity. In addition, several companies are exploring or developing mineral properties in Montana and Minnesota. Oil and gas exploration and production were about level from late February through late March.

Agriculture
Activity in the agricultural sector increased. Spring rains across the district bode well for the upcoming growing season. Half the winter wheat crop in Montana is rated good or excellent, and the calving season is progressing ahead of last year and the five-year average. Meanwhile, prices remained relatively solid throughout March for the main agricultural products produced in the district.

Employment, wages and prices
Overall employment levels increased modestly since the last report. According to a survey of Minneapolis-St. Paul companies by a temporary staffing agency, 29 percent of respondents expect to increase staffing levels during the second quarter, while 9 percent expect decreases. Montana bank directors reported tight labor market conditions in many areas. March initial claims for unemployment insurance were flat from a year ago in Minnesota.

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.

Return to topReturn to top

Previous St. Louis Kansas City Next


Home | Monetary Policy | 2006 calendar
Accessibility | Contact Us
Last update: April 26, 2006