Federal Reserve Bank of Minneapolis

Summary of Economic Activity

The Ninth District economy grew slightly since the previous report. Employment grew slightly, and labor demand continued to moderate. Price pressures increased moderately, and wage growth was also moderate. Commercial and residential construction improved slightly. Consumer spending also rose slightly, with contacts noting some spending caution among customers. Manufacturing ticked slightly higher. Agricultural conditions remained weak amid some positive developments. Activity among minority- and women-owned business enterprises was slightly positive.

Labor Markets

Employment grew slightly since the last report. Labor demand continued to moderate but remained positive. A monthly survey of District firms found that the share of respondents with job openings remained positive, but a slightly larger share noted staffing cuts. Labor demand in construction remained healthy despite widespread reports of slower activity. Hospitality and tourism firms reported increased hiring of seasonal workers in anticipation of rising spring and summer business. A Montana accounting firm noted that it had "a lot of unfilled job openings at all levels." Employers were also reporting better labor availability. A Minneapolis-St. Paul hotel owner said the facility was sufficiently staffed and applicant quality "seems to have gotten much better." A winery in central Minnesota said that it received "a lot more applications for part-time [and] seasonal workers this year, which is very encouraging." Not everyone had the same experience. A Minnesota manufacturer said, "I don't expect to fill any of my open jobs. We are increasing our capital expenditures to adapt our processes to smaller headcounts."

Wages rose moderately. District employers reported that median wages were generally growing between 2 and 3 percent. However, a monthly pulse survey found that a larger share of businesses reported higher wages compared with results from the previous two months. In separate surveys, construction and hospitality firms both reported that wages were rising overall, but at somewhat slower rates than the previous year.


Price pressures were unchanged since the last report, as overall prices increased moderately. Most respondents to an April District business conditions survey reported no change to prices charged from a month earlier, while one-third said they increased prices. Input price pressures remained greater, as more than half of firms reported that they increased in April. Reports from contacts across the region indicated that businesses were less able to pass input cost increases to customers, who are feeling stretched budgets. Manufacturing contacts reported that metals prices spiked recently. Retail fuel prices in District states decreased slightly since the previous report.

Worker Experience

Job seekers in Minnesota shared that they were hesitant to accept a job offer if schedules were inflexible or pay was insufficient to meet their needs. They also listed training, time for job search, access to transportation, and affordable housing as important in helping them reach their career objectives. A contact in the Minneapolis-St. Paul area commented that students were facing difficulties finding summer internships this year because some employers had a shortage of available supervisors. A contact in the Upper Peninsula of Michigan shared that older workers in the region often feel discouraged to apply for jobs because of the listed requirements. They added that many older workers wanted more schedule flexibility instead of retirement.

Consumer Spending

Consumer spending grew slightly since the last report, with contacts noting some spending caution among customers. Hospitality and tourism firms overall reported modestly higher revenues of late. Hotel demand rebounded somewhat from a poor winter, but contacts reported that they were reducing prices to bump up demand. Contacts were also cautious in their outlook for summer business compared with last year. A Minnesota winery and restaurant said it was seeing lower average spending among patrons. "Guests are being very careful with their money. We see less of our regulars and [more] moderate spending." A Montana restaurant and hotel owner was trying to avoid passing further cost increases to customers. "At some point, they will say, ‘I am not paying $20 for a hamburger.'" Vehicle sales have flattened overall. New-vehicle sales were still growing, but dealer incentives returned. A Montana dealer said used vehicles were "on a big slide" due to higher interest rates. Airline traffic grew, but more slowly than in previous months.

Construction and Real Estate

Construction activity improved slightly since the last report. Industry data showed that recent activity increased as the sector moved into the traditionally busier spring season. A larger share of firms also expected increased activity going forward compared with those who expected a decline. However, other metrics were more cautious. Firms overall reported a decline in new projects out for bid for this time of year; project backlogs were also shorter, and cancellations continued to challenge the sector. Firms doing infrastructure work reported more activity and a better outlook; those in residential and commercial reported mixed but improving activity, and industrial firms reported slowing business. Large firms also reported consistently stronger activity than smaller firms.

Commercial real estate was flat and remained soft overall. Office vacancy in Minneapolis-St. Paul stabilized, but loan renewals were reportedly seeing discounted property appraisals and high loan-to-value ratios. Vacancy rates for industrial space nudged higher, though from low levels. Multifamily property benefited because new construction "has stopped in its tracks," according to a Minnesota source. Residential real estate was strongly higher, as many regions saw sales in April increase from 20 to 40 percent year over year, along with strong increases in new listings.


District manufacturing activity increased slightly on balance since the previous report. A regional manufacturing index indicated increased activity in Minnesota and South Dakota in April from a month earlier, while activity decreased in North Dakota. The number of manufacturing contacts who reported increased recent orders was similar to the number who reported decreases. A food producer added staff in expectation of increased sales. In contrast, a producer of construction equipment reported its sales were very weak compared with seasonal norms.

Agriculture, Energy, and Natural Resources

Agricultural conditions in the District remained weak amid some positive developments. Lenders responding to an agricultural credit conditions survey overwhelmingly reported decreased farm incomes in the first three months of 2024 relative to a year earlier, with expectations for further declines in the second quarter. However, contacts in the industry reported that some moderation in input costs was expected to benefit producer margins. Recent precipitation alleviated drought conditions in much of the region, and crop planting and progress was generally near average for early spring. However, poor snow cover over the winter negatively impacted the quality of the winter wheat crop in the western parts of the District. District oil and gas exploration activity was unchanged since the previous report.

Minority- and Women-Owned Business Enterprises

Activity among minority- and women-owned business enterprises was slightly positive over recent weeks. More contacts reported increases in sales than those who reported flat or lower activity. Some businesses saw a decline in job openings, and others continued to struggle to find qualified candidates. Profits remained under pressure among contacts due to increased input costs, but some were optimistic that pressure would lessen in the coming weeks.

For more information about District economic conditions visit: https://www.minneapolisfed.org/region-and-community.

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Last Update: May 29, 2024