March 13, 1991
Ninth District economic activity has generally declined, though there are some areas of strength. Labor market conditions have been mixed. General merchandise sales have ranged from declines relative to a year ago levels, to slight increases. Automobile sales and housing construction are down from a year ago. Conditions in manufacturing, construction, and resource-related industries have been mixed.
Employment Wages and Prices
Labor market conditions have been mixed, with North and South Dakota
showing slight gains, while the rest of the district has generally
deteriorated. The unemployment rate has fallen in North Dakota to
3.8 percent in December from 4.1 percent a year ago, while in South
Dakota it fell to 3.2 percent from 3.7 percent over the same period.
In contrast, the unemployment rate in Montana rose to 6.8 percent in
December as compared to 5.3 percent a year ago, while that in the
Upper Peninsula of Michigan rose to 9.3 percent from 8.8 percent
over the same period. The unemployment rate continued to rise in
Minnesota reaching 5.4 percent in January of 1991, up from 4.9
percent a year ago. Total employment in the district was generally
higher than a year ago. In Minnesota, both total and nonfarm
employment was about 1 percent higher in December of 1990 as
compared to a year ago, due in large part to strong growth in the
service sector. However, employment in construction and
manufacturing have declined during the past year. In both North and
South Dakota as well as Montana employment grew in almost all
sectors over the past year.
Consumer Spending
District retailers of general merchandise generally report
disappointing sales relative to their expectations. Retailer reports
of January sales in comparable stores ranged from 1.2 percent higher
to 6 percent lower than in January 1990. Retailers generally
attributed the flat sales to uncertainty about the economy and the
Gulf war. However, some retailers felt that the apparent end of the
Gulf war might have a positive effect on consumer attitudes. North
Dakota recently reversed a more than century-old ban on Sunday
retail sales.
New car sales have been mixed in February with most dealers reporting declines, though one dealer reported a 2 percent increase over the same period a year ago. Dealers expressed optimism about the near future, but noted a trend towards smaller cars. Used car sales in the district are reported to be strong. District truck sales have declined sharply with dealers reporting February declines ranging from 20 to 33 percent relative to a year ago. Dealers' reports on car and truck inventory levels range from moderate to high.
Housing has continued to be depressed in the district. In Minnesota housing permits fell to a six year low in December of 1990, down 13 percent from a year ago, and 43 percent from two years ago. A recent study of housing in the Minneapolis-St. Paul area predicted that housing sales will continue to be low due to stagnant population growth and an oversupply of existing units.
Tourism activity has been moderate to good, with some signs of weakness. Local tourism officials have expressed some hope that with the recent reductions in international travel may benefit the area. Ski resorts in Montana and parts of Wisconsin report fairly good snow conditions, while those in the Upper Peninsula of Michigan report that insufficient snow has slowed business. However, general tourist activity in the Upper Peninsula has been fairly good. The number of crossings over the Mackinac Bridge onto the Peninsula in 1990 was almost 7 percent higher than the previous year. Tourism was also up in South Dakota, especially the Black Hills and Badlands areas.
Construction and Manufacturing
Conditions In the district's construction industry have been mixed.
The continuing overhang of office space in the Minneapolis-St. Paul
area has depressed construction activity in the area. This overhang
will be increased by the completion of four new office buildings,
currently under construction.
The status of the district's manufacturing industries has been mixed lately. An index of economic activity In the Minneapolis-St. Paul area dropped in December from its November level, though it ended the year slightly above last year's level.
Resource-Related Industries
Ninth district conditions of resource-related industries have been
mixed. For the ninth consecutive month, the Minnesota index of
prices received by farmers fell. The mid-January level is the lowest
since 1988. Wheat and milk prices accounted for a significant
portion of the decline. Dairy farmers, in particular, are reported
to be doing poorly. Cattle prices have remained strong however, and
ranchers in the district report that 1990 was an excellent year.
Precipitation in the district has been below normal, which could
adversely affect 1991 crop yields. The district's mining industry
conditions have been fairly good. For example, iron ore production
in Minnesota in 1990 was 5.1 percent higher than in 1989.