June 12, 2002
Federal Reserve Districts
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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
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
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.
Mining and Energy
Employment, Wages, and Prices
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.