September 8, 1987
Economic growth in the Ninth District continues apace. Labor market indicators point to favorable employment conditions. While consumer spending didn't strengthen generally, tourist spending did. Mining activity has picked up, and improved agricultural conditions are likely to lead to higher farm income.
Employment
Ninth District labor markets have continued to create good
employment opportunities. In Minnesota, the district's most populous
state, employment grew strongly in July, with all sectors posting
growth, including manufacturing. The employment growth drove down
the state's unemployment rate two-tenths of a percent, to five
percent in July—its first decline since April. Employment
conditions were particularly favorable in the Minneapolis-St. Paul
metro area, where the help-wanted advertising index rose about 31
percent higher this June than last. In Montana the unemployment rate
has been projected to hold steady at 6 percent in July, although the
drop in seasonal employment may be sharper than usual. In North
Dakota, construction jobs were the biggest contributor to higher
employment, according to recent data. A Bank director reports that
labor markets in eastern South Dakota are so tight that the shortage
of workers may deter some firms from locating there. And another
director notes that the construction and operation of two new state
prisons are projected to markedly increase employment in the Upper
Peninsula of Michigan.
Consumer Spending
Reports on retail spending for general merchandise have been mixed.
One retail chain complained of high markdowns to sell off summer
merchandise; as a result, its July sales were lower than planned.
But another chain reports that its July sales were stronger than a
year earlier, particularly in the Minneapolis-St. Paul area.
Elsewhere in the district, a discount chain is opening a few stores.
A Bank director notes that the sales volume of retailers in a large
mall in La Crosse, Wisconsin, were over 7 percent higher this year
than last.
Sales incentives have increased purchases of motor vehicles recently. One domestic manufacturer reports that its district sales have been strong, with both car and truck sales up over 15 percent in August and its inventories down. Another domestic manufacturer reports that consumer response to its incentives has been brisk, and that increased farm income should help rural sales this fall. A director notes than in western Wisconsin some car dealers, who had been doing poorly, have recently been doing better.
Scattered reports indicate that district housing activity has been mixed. Home sales in Minneapolis were 14.7 percent lower in July than a year earlier, and single-family housing permits in Minneapolis-St. Paul were off a bit in June. But in other parts of the district, housing activity may be picking up. In North Dakota a newspaper editor reports that new home construction is booming in Fargo, while a business representative in Williston, notes that a glutted housing market has recently improved there. A director reports that orders for telephones were up lately, indicative of new home construction.
Tourism
The district's large tourism industry has continued to enjoy
excellent summer business. An industry spokesman in Minnesota
reports that business this year is far beyond projections. Inquiries
at Minnesota's State Tourism Office are up 36 percent over last
year. Industry representatives for the Black Hills of South Dakota
note that this year was very good, and new tourist projects there
are now underway. Tourist trade has also been flourishing in western
North Dakota. In the Indianhead region of northwestern Wisconsin,
campgrounds and resorts have been full. And the best tourism
conditions in six years have been reported from Michigan's Upper
Peninsula. Most areas are projecting good fall business as well.
Resource-Related Industries
Some good news is evident in the district's resource-related
industries. Signs of increased interest in oil exploration were
mentioned by observers in western North Dakota and in Montana. Gold
mining has been active in South Dakota and Montana. The country's
first platinum/palladium mine, employing over 200 workers, was
recently dedicated in rural Montana. The port of Duluth reports a
big increase in the amount of coal and iron ore shipped through to
U.S. and Canadian destinations this year.
Agriculture
Agricultural conditions have continued to improve. Higher livestock
prices and profits are causing euphoria among raisers, according to
a Bank director from South Dakota. A director from Montana notes
that calf prices are also high and that Montana wheat producers are
benefiting from a big crop and price supports. Record soybean yields
are expected in Minnesota. Plans for an egg-laying facility holding
one million hens were just announced in South Dakota. Wet weather is
a concern to farmers in some parts of North Dakota, though.