May 3, 2000
Federal Reserve Districts
|Skip to content
Economic activity in the Ninth District continues at a robust pace. Construction, manufacturing, energy, and iron and palladium mining industries keep on invigorating the economy. Consumer spending is still strong and agriculture continues to climb out of its deep slump. Due to light snowfall, winter tourism finished down, but the outlook for summer tourism is bright. Labor markets are still tight as businesses report wage pressures. Consumer inflation remains stable, although some price increases were noted, primarily in petroleum-related products.
Construction and Real Estate
Residential construction also is sturdy as building permits and home values continue to rise. During the first quarter of 2000, 18 percent more district housing permits were authorized than a year earlier. Despite higher interest rates, building activity remains brisk in the Upper Peninsula of Michigan, according to a homebuilder association board member. In addition, recent valuations on property in the Rochester, Minn., area are expected to show a 10 percent to 15 percent increase from a year ago.
Meanwhile, winter tourism finished down due to abnormally light snowfall. The winter season was off 10 percent to 15 percent compared with last year in the Upper Peninsula of Michigan. Hotel occupancy in northern Wisconsin was below last year's levels for February and March, according to a chamber of commerce representative. On a positive note, inquiries about summer activities were at or above year-earlier levels at tourism offices.
Mining and Energy
Meanwhile, Ninth District oil exploration and production continue at a strong pace. In April, 13 rigs were operating in North Dakota compared with one a year ago and estimated April oil production in North Dakota was up 1 percent from a year ago at 92,000 barrels per day. In addition, Montana rig operation increased to six compared with four a year ago, and Montana oil production is up 6 percent from a year ago at 47, 000 barrels per day.
Meanwhile, most district farmers need rain. The U.S. Department of Agriculture reports that topsoil moisture conditions are rated as short or very short for 59 percent of Montana, 42 percent of Minnesota, 26 percent of South Dakota and 26 percent of North Dakota. However, the Montana Agricultural Statistics Service reports that 51 percent of the Montana winter wheat crop is in good to excellent condition.
Employment, Wages, and Prices
Even though labor markets remain tight, some layoffs were reported. A computer disk drive manufacturer will cut 950 jobs due to soft demand, a printing plant closing in St. Paul will cost 550 jobs, and a major Minneapolis-based food company will release 270 workers due to restructuring.
Businesses continue to increase wages to attract workers. District manufacturing wages are up 3 percent compared with a year earlier. An economic development official in Sioux Falls, S.D., noted wage pressure for unskilled positions, including signing bonuses at fast food restaurants. Nurses at a Missoula, Mont., hospital will receive an 8 percent raise next year.
Inflation is generally stable, with some notable exceptions, especially increases in petroleum and health care. Bank directors report additional fuel surcharges for transportation and heating services. Trucking rates are up 9 percent from a year ago, according to a Minnesota Trucking Association spokesperson. Health care costs in Minnesota increased 10 percent to 12 percent from year-earlier levels, reports a bank director. In addition, the St. Cloud Area Business Outlook Survey shows that 34 percent of area firms expect to increase prices over the next six months, the highest level since the survey began in December 1998.