January 25, 1989
Ninth District economic conditions have been fairly good. Unemployment rates increased over previous months but were generally lower than a year ago. Consumer spending, particularly Christmas purchases, was excellent. Price increases in consumer goods were moderate but some agricultural and raw material prices rose sharply. Conditions in resource-related industries were excellent.
Labor Markets
The employment situation has been fairly good throughout the
district. Between October and November, Minnesota's unemployment
rate rose eight-tenths of a percentage point to 4.5 percent. However
this figure, like that for the other states reported here, is not
seasonally adjusted and is substantially lower than the unemployment
rate of 5.2 percent in November 1987. The unemployment rate in the
Minneapolis/St. Paul metropolitan area rose by six-tenths of a
percentage point from October to a rate of 4.0 percent in November.
Analysts attributed this increase largely to seasonal factors. A
director notes that high technology firms are experiencing tight
labor markets of professionals, such as engineers. South Dakota's
unemployment rate in November was 4.3 percent; eight-tenths of a
percentage point lower than a year ago. North Dakota's employment
rate was 5.2 percent in November, compared to 4.0 percent in October
and 4.5 percent in November 1987. Montana's unemployment rate in
October was 5.0 percent, up two-tenths of a percent from September.
In the Upper Peninsula of Michigan, the unemployment rate was 6.7
percent in October, down five-tenths of a percentage point from
October 1987.
Consumer Spending
Consumer spending on general merchandise has continued to increase
and retailers report good to excellent Christmas sales. One retailer
reports that sales in December were up 18 percent in comparable
stores from December 1987 and that sales for all of 1988 were up 18
to 20 percent from the previous year. Inventories have stayed at
acceptable levels.
Motor vehicles have been selling fairly well. Dealers for a domestic manufacturer estimate that their car sales for the entire year were up 5 to 7 percent from the previous year; however, dealers for another manufacturer report a decline of 3 percent in car sales in 1988 compared to 1987. Trucks have been selling extremely well, with dealers for one manufacturer reporting a 16.4 percent increase in sales in 1988 from the previous year. Dealers for another manufacturer report backlogs in truck orders of 8 to 10 weeks with even longer delays for trucks equipped with automatic transmissions.
Housing activity has been generally lower than a year ago. The number of new housing permits issued in Minnesota in November was 11.6 percent lower than in October and 15.1 percent lower than a year ago. Home sales in the Minneapolis-St. Paul metropolitan area for the year through November were 8.79 percent lower than a year ago. A director reports that the number of homes listed for sale in Montana for the year through October was 7 percent lower than in the same period a year ago.
Tourist spending has continued to be strong. The number of hotel reservations in Montana for December was reported to be 10 percent higher than a year ago and motels in Montana reported that their reservations for the year through October were 12 percent higher than the same period a year earlier. Ski resorts throughout the district also reported strong business.
Prices
Prices in the district have been increasing moderately in consumer
goods and sharply in agriculture and raw materials. A director notes
a near doubling of hay prices from a year ago. The value of farmland
was reported to have stabilized.
Resource-Related Industries
Conditions have been excellent in the resource-related industries.
New silver and copper mines are opening up in Montana. An aluminum
reduction plant in Montana reports that all its production is
guaranteed for sale through 1995. Several mining and processing
firms in the same state have paid substantial year-end bonuses to
their employees; in one case the bonuses are reported to be 106
percent of the employees' annual salary. The wood products industry
in Montana reports having its best year ever. Several new mills are
on the drawing boards or in construction. The Upper Peninsula of
Michigan also reports an excellent year in the lumber industry.