January 15, 2003
Federal Reserve Districts
|Skip to content
Ninth District economic activity was subdued from mid-November through early January. Tourism, agriculture and commercial construction activities were down. Consumer spending and energy were flat. However, manufacturing, home building and mining grew. Over this period, labor markets tightened slightly, while overall wage and price increases were modest. Significant price increases were noted in employee benefits, natural gas, and gasoline.
Construction and Real Estate
Home building was up from a year ago. Housing units authorized in District states were up 5 percent for the three-month period ending in November compared with a year ago. In Minneapolis-St. Paul, demand for multifamily buildings has spurred construction, according to a builders association representative. A realtor in Sioux Falls, S.D., noted high levels of refinancing activity and remodeling during 2002 compared with 2001, and he expects fewer families to move during 2003.
Consumer Spending and Tourism
In contrast, a chamber of commerce official in northern Wisconsin reported that area big box and downtown retailers had solid sales during the holidays. In North Dakota, a mall reported just under 5 percent growth in holiday sales, with particularly strong sales in gift certificates and jewelry. A Minneapolis mall manager reported strong traffic and sales after an extended remodeling project.
Auto sales were generally slow. In Minnesota, auto sales were soft in December compared with a year ago, according to a representative of an auto dealers' association. After a period of slow November auto sales in South Dakota, sales picked up somewhat in the beginning of December, according to another auto dealers' association representative.
Winter tourism got off to a very slow start due to the lack of snowfall across the District. Business was down substantially in the Upper Peninsula of Michigan and northern Wisconsin at establishments that rely on snowmobile traffic. In the Black Hills of South Dakota, downhill ski areas reported fair lift ticket sales, but snowmobiling was off 70 percent from last year. A Montana ski resort reported slow lift ticket sales, but lodging reservations going forward are ahead of last year.
Energy and Mining
Employment, Wages, and Prices
However, some layoffs were reported. In southwest Minnesota a poultry plant recently announced its closing, affecting 162 jobs. A machine manufacturer shut down a plant in the Upper Peninsula that resulted in 90 layoffs. A tractor plant in North Dakota will lay off 30 workers early in 2003, after laying off 30 employees in October and November due to the slow farm economy.
Wage increases were moderate. District wages for manufacturing workers were up 1.7 percent for the three-month period ending in November compared with last year. In Minnesota, wages for construction workers were flat from a year ago, while wages for workers in retail and wholesale trade were up 2.3 percent for the three-month period ending in November compared with last year.
Overall price increases were modest, except for significant increases noted in employee benefits, natural gas, and gasoline. Bank directors reported that while overall prices are expected to remain relatively level in 2003, significant price increases are expected in employee benefits and natural gas. Health benefits for employees of businesses in the state of Wisconsin increased 15 percent in 2002. Recent gasoline prices in the Minneapolis-St. Paul area were up over 33 percent from a year ago.