September 10, 1986
During recent months, economic conditions in the Ninth District held steady. In some areas, employment grew better than seasonal norms. Both consumer spending and tourist activity made some gains. Resource-related industry performance remained mixed. Although crop conditions have generally been excellent, higher yields will probably lead to lower market prices.
Employment
The most recent data indicate that the Ninth District's labor
markets continued to improve. Seasonally adjusted employment in the
district rose in June, driving the unemployment rate down from 5.9
to 5.6 percent. For the first time in several months, the
Minneapolis-St. Paul metro area's unemployment rate fell below its
year-earlier level, and even manufacturing employment there rose for
the first time in over a year. In South Dakota, employment in the
service industry hit a record June high. Among district states, only
North Dakota failed to post employment gains during June. And
despite growth in June, Montana's second-quarter employment was
lower than its 1985 level.
Consumer Spending
Scattered reports suggest that over the summer, retail sales of
general merchandise may have strengthened a bit. One retail chain
reports a July sales increase of 10 percent, with no inventory
accumulation. Another retail chain reports August sales to be a bit
stronger than sales earlier this year. Both chains had successful
back-to-school promotions, and both noted a pickup in cash sales
relative to proprietary credit card sales.
Motor vehicle sales in the district have been good in metro areas but poor in rural areas. One large domestic manufacturer reports that its district sales of cars and trucks are still above last year's levels. Another manufacturer says that its sales in farm communities were flat in July but expects sales to increase after the harvest. Neither manufacturer has high inventories. One Bank director reports slow auto sales in Bismarck, North Dakota, while another reports increased sales during June and July in parts of western Wisconsin.
Homes are still selling well in many parts of the district. Both the unit and dollar values of Twin Cities home sales exceeded their year-earlier levels by over 35 percent in July. However, a logjam of closings has slowed the cash flow to realtors. Building permits in the Twin Cities were 25 percent higher in the second quarter than they were a year earlier. A Bank director from the Upper Peninsula of Michigan reports that new home sales in the Iron Mountain area have been good. In contrast, both building permits and home sales in Montana have been substantially lower than last year's.
Tourism
Tourist spending in the district's hard-pressed non-metro areas has
been good, although not as good as expected this spring. Crossings
over the Mackinac Bridge into Michigan's Upper Peninsula reached a
record high in June, rising 5 percent above last year's level. Also,
travel to that area's Keweenaw Peninsula has been exceptionally
good. While statistics aren't available yet, summer tourism looks
good so far in northern Wisconsin. Tourist activity is up somewhat
in the Dakotas, but not by nearly as much as many had hoped. In
Montana, visits to campgrounds have been quite popular, although
attendance at the state's national parks has been mixed.
Resource-Related Industries
The performance of the district's resource-related industries
continues to be uneven. Wood product industries are still generally
a bright spot. Paper and waferboard plants are outperforming lumber
mills, though, and loggers are dissatisfied with the slack poplar
market. A Bank director thinks that the poplar market may be
stimulated by new plywood and waferboard operations in Michigan's
Upper Peninsula. Declines in oil, gas, and coal production continue
to plague North Dakota and Montana. In Montana, construction has
started on a gold mine near Helena, while a copper mine has reopened
in Butte.
Agriculture
Crop conditions in the district still look good, but market crop
prices have continued to fall. Minnesota's farm price index fell in
July, dropping to 3 percent below last July's level. The decline may
help stimulate export sales, while government deficiency payments
will help insulate many farmers from the falling prices. Some
isolated snippets of good news apply to the district's farm sector.
Hog and cattle operations have benefited from lower feed prices, and
prices for these animals rose. Dairies in Minnesota and Wisconsin
shipped milk to drought-stricken southeastern states, helping firm
dairy prices here. And a two-week marketing trip to the Orient
resulted in signed contracts for the export of bee pollen products
produced on the southern edge of Montana's Flathead Indian
Reservation.