July 31, 2002
Federal Reserve Districts
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The Ninth District economy appears to have expanded modestly from early June through mid-July. Agriculture, consumer spending, residential construction, tourism and manufacturing grew. Meanwhile, the energy and mining sectors were level and commercial construction contracted. From early June through mid-July, labor markets, wages and prices stabilized. However, significant price increases in insurance, plastics, steel and residential real estate were noted.
Construction and Real Estate
Residential construction is strong, while home real estate activity is steady. In the Minneapolis-St. Paul area, housing units authorized for June year to date increased 16 percent compared with a year ago. In May, more homes were for sale compared with the same period last year in the Minneapolis-St. Paul area, keeping residential sales activity steady but not as frenzied as a year ago, according to a realtors association representative. The pace of recent residential construction in Sioux Falls, S.D., is slightly ahead of a year ago, according to a building official; however, apartment vacancy rates are at the highest level since 1996 due to high levels of multifamily building over the past two years.
Consumer Spending and Tourism
Auto sales in Montana improved in June compared with the previous few months, according to a Montana bank director. However, an automobile dealer association representative in Minnesota noted generally slower business in June compared with last year, particularly at dealerships located outside the Minneapolis-St. Paul area.
Tourism is strong in several areas. In the La Crosse, Wis., area summer tourism is off to a good start compared with last year, according to an official. Most hotels and resorts surveyed in Minnesota at the end of June by the state tourism office reported the same or higher occupancy than a year ago, except for the Minneapolis-St. Paul area, where about half of respondents reported lower occupancy levels. Tourists were recently evacuated from Deadwood, S.D., for two days due to forest fires; however, business recovered quickly according to a tourism official. Visits to Mount Rushmore were up 23 percent in June compared with last year.
Energy and Mining
Employment, Wages, and Prices
In contrast, the expansion of a Minnesota furniture store could increase its staffing levels by up to 130 employees by next year. A Minnesota e-commerce company recently announced plans to add up to 90 employees to its sales department. A proposed call center in South Dakota would initially employ 150 workers, potentially expanding to 500 in five years. Furthermore, the number of initial claims for unemployment in Minnesota decreased about 8 percent in June compared with the same month last year.
Wage increases are moderate. A Montana bank director reported employers in northeast Montana expect to increase wages about 3 percent or lower. Hourly wages for district manufacturing workers increased 2.9 percent for the three-month period ending in May.
Price increases are modest, except in insurance, plastics, steel and real estate. Several bank directors reported little growth in overall prices. However, Minnesota's health maintenance organizations recently reported an increase in premium revenue per member by 14 percent over a year ago. A bank director reported recent significant price increases for plastics and steel compared with a year ago. The median price for a home in Minneapolis-St. Paul increased almost 7 percent in May compared with a year ago.