April 14, 2010
Federal Reserve Districts
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The Ninth District economy grew moderately since the last report. Consumer spending, tourism, residential real estate and construction, services, manufacturing, energy, mining and agriculture saw increases. Commercial real estate was flat at low levels, and construction activity was slow. Labor markets remained weak, but some signs of hiring were noted. Overall compensation levels were flat, and price increases were moderate.
Consumer Spending and Tourism
Vehicle sales picked up in March compared with a year ago when sales were substantially down. A number of dealerships in the Minneapolis-St. Paul area reported that sales were up over 40 percent in March compared with a year ago; strong incentives by automakers helped boost sales. Recent vehicle sales have been steady in North Dakota, according to a representative of an auto dealers association.
Overall travel and tourism activity was up slightly. A ski resort in northern Minnesota noted that February and March ski lift sales and lodging were higher than a year ago. A Minnesota-based travel agency noted that corporate travel during February and March was up slightly from a year ago. Winter tourism activity was about even with a year ago in Montana, but tourism-based businesses noted an uptick in February and March, according to an official. In northwestern Wisconsin, excellent snow conditions boosted snowmobiling and cross-country skiing in February; warm weather in March brought an early end to snow sports, but tourism businesses are optimistic for the summer season.
Construction and Real Estate
Meanwhile, residential construction showed signs of strengthening. March home building permits for the Minneapolis-St. Paul area more than doubled in value from the same month a year earlier--their highest level since 2007--primarily due to gains in the multifamily sector. In contrast, February residential permits in Sioux Falls decreased 21 percent from a year earlier. Construction activity in western Montana continues to be very slow, according to developers there.
Commercial real estate was flat at low levels. A commercial real estate broker in Fargo, N.D., said vacancy rates were down slightly for office properties, but the industrial segment was weaker. A Minnesota commercial broker said rents there were at their lowest levels since 1990.
Residential real estate continued to rebound. Closed sales in late March were 11 percent higher than a year earlier in Minneapolis-St. Paul, and sales prices increased. Sales also picked up in western Montana, due in part to big reductions in asking prices.
Energy and Mining
Employment, Wages and Prices
In contrast, two employment placement firms in Minnesota reported an increase in hiring for some entry level positions and an increased interest in executive placement services. Also in Minnesota, a bank announced intentions to hire more wealth management advisors, a wind energy project just under way will create 150 jobs and an auto dealer will hire 15 salespeople.
Overall wages were flat, as a number of contacts noted that wages and salaries at their companies were level with a year earlier. The University of Minnesota's faculty senate recently approved a measure to cut pay temporarily for most University employees by about 1 percent.
Price increases were moderate. Minnesota gasoline prices at the end of March were up slightly from the end of February. However, copper and nickel prices increased since the last report, as well as some prices for lumber and steel products.