January 23, 1991
Ninth District economic conditions have been uneven. Labor marker conditions have been mixed. General merchandise sales growth has been slow to moderate. Automobile sales have declined from their year-ago levels. Housing activity has rebounded but has remained depressed from its levels in the late 80s. Conditions in construction and manufacturing have been mixed. Resource-related industries have been doing fairly well. Many respondents expressed concern about the economic effects of the situation in the Persian Gulf.
Employment, Wages, and Prices
Labor marker conditions have been mixed in the district. Minnesota's
unemployment rate was 3.8 percent in November, down from 4.2 percent
in October, but up from 3.6 percent in November 1989. Unemployment
rates in November were higher than a year earlier in Montana and the
Upper Peninsula, but lower in North and South Dakota and western
Wisconsin. Employment levels in the district in November were
generally higher than their year-ago levels. In Minnesota, for
example, the number of people employed in November was 1.5 percent
higher than in November 1989. There are some signs of weakness,
however. The help wanted index in Minnesota in November was 26.3
percent lower than in November 1989. A nationwide survey of
employers reports that in the Minneapolis-St. Paul metropolitan area
8 percent of employers intended to add employees and 13 percent
intended to cut back their employment levels. The survey also
reports that the metropolitan figures were slightly was than the
national average. Wage and price increases have remained moderate.
Consumer Spending
District retailers of general merchandise report slow to moderate
sales growth. One major retailer reports that December sales in
comparable stores were 2.4 percent higher than in December 1989.
Another retailer reports that while national sales were only 1.5
percent higher in December than a year ago, sales in the Upper
Midwest region of the country were 4 percent higher than a year ago.
Retailers' comments generally reflect disappointing sales relative
to their expectations. One retailer reports that discounting of
prices was broader and deeper than expected. Retailers generally
expressed a great deal of uncertainty about the outlook for the next
few months, due in part to concerns about the conflict in the Middle
East.
New car sales in the district in December were generally lower than a year ago. Dealers report sales declines from last December ranging from 6 percent to 30 percent. Reports on truck sales in December relative to a year ago range from unchanged to a decline of 14 percent. Dealers' reports on car and truck inventory levels range from moderate to high.
Housing starts have rebounded from their depressed levels in 1990, but are still sharply lower than their levels two years ago. The number of new housing permits issued in Minnesota in November was 7 percent higher than in November 1989, but 25 percent lower than in November 1988. Existing home sales in the Minneapolis-St. Paul metropolitan area have recently shown signs of slowing. In November they fell by 9.4 percent from November 1989.
Tourist activity has been moderately good. Ski resorts in Montana and parts of Wisconsin report fairly good conditions, while those in the Upper Peninsula of Michigan report that a lack of snow has slowed business. However, general tourist activity in the Upper Peninsula of Michigan has been fairly good. The number of crossings over the Mackinac Bridge into the Peninsula in November was 7.2 percent higher than the previous record levels of November 1989. The number of visitors to Yellowstone in 1990 was 6.1 percent higher than in 1989.
Construction and Manufacturing
Conditions in the district's construction industry have been mixed.
The overhang of office space in the Minneapolis - St. Paul
metropolitan area is expected to depress construction activity in
the area. The value of office buildings in downtown Minneapolis has
declined recently, causing an expected erosion of about 10 percent
in the city's commercial tax base.
Conditions in the district's manufacturing industries have been mixed lately. An index of economic indicators shows that economic activity in the Minneapolis-St. Paul metropolitan area fell in the third quarter from the second quarter, but was higher than in the third quarter of 1989. Computer and electronics industries in the district have continued to be in poor shape, but aircraft industry suppliers report rapid sales growth. Several respondents report that export demand has continued to be strong.
Resource-Related Industries
The district's resource-related industries have been doing fairly
well. Ranchers in the district report that 1990 was an excellent
year. Farmers generally report that crop yields in 1990 were fairly
good. However, prices for farm products have generally declined. An
index of prices received by farmers was 9 percent lower in November
than in November 1989. Farmland values in the district rose
approximately 4 percent during 1990. Precipitation in the district
this winter has generally been below normal, which could adversely
affect crop yields in 1991. Conditions in the district's mining
industry have been fairly good. Iron ore production in Minnesota in
1990 was 5.1 percent higher than in 1989.