August 7, 1991
The Ninth District has continued to feel the effects of the national recession, but there are signs of recovery. Labor market conditions have continued to improve, while retail sales have exhibited moderate growth. Conditions in construction and resource-related industries have remained mixed, while manufacturing has shown signs of rebounding.
Employment, Wages, and Prices
Labor market conditions generally improved in the District, but
still remained depressed. Minnesota's unemployment rate fell to 4.8
percent in June, down from 5.5 percent in the previous month, and
only slightly higher than the 4.6 percent level of a year ago. May
unemployment figures, while somewhat lower than in April, were still
above their year ago levels in Montana, western Wisconsin, and the
Upper Peninsula of Michigan. The May unemployment rate in Montana
was 6.4 percent, 1 percent above its year ago level. In the Upper
Peninsula of Michigan the May unemployment rate was 10.4 percent as
compared to 8.5 percent a year ago. South Dakota's May unemployment
rate of 3.4 percent was unchanged, both relative to the previous
month and year-ago levels. In North Dakota, by contrast, the May
unemployment rate of 4.2 percent was 0.5 percent higher than the
previous month, but only 0.6 percent higher than a year ago. The
growth of nonagricultural employment in May relative to its year ago
level was fairly strong in North and South Dakota, 1.2 and 2.6
percent respectively, but generally weak in the rest of the
District, rising by 0.3 percent in Minnesota, and 0.4 percent in
Montana.
Consumer Spending
District retailers of general merchandise report slightly higher
sales figures for June relative to year-ago levels, (figures are for
the five-week period ending July 6) with sales increases in
comparable stores ranging from 2.3 to 8 percent relative to a year
ago. Minnesota sales tax receipts were down 6.2 percent in June, but
up 2.6 percent in May relative to year-ago levels. Retail sales in
North and South Dakota, as well as in Montana, continue to benefit
from the strong influx of Canadian shoppers.
New car and truck sales continue to be weak, though used cars show some improvement, and dealers report that their service departments are running close to capacity. Dealers report new car sales declines ranging from 5 to as much as 40 percent at some small dealers for the first half of this year relative to a year ago. However, recreational vehicle and boat sales are reported to be strong.
Housing sales in the District have been mixed lately. The depressed Minneapolis-St. Paul area experienced a surge in May, with sales at their highest level in three years. However, June sales were down 9.6 percent relative to a year ago, and 23.2 percent from May, with the change being attributed to a recent rising cost of FHA-insured mortgages. Home sales are reported to be especially strong in parts of South Dakota.
Tourist activity has been strong in the District. The number of crossings over the Mackinac Bridge onto the Upper Peninsula of Michigan relative to year-ago periods were up 3.6 percent in the first 22 days of July, and up 3.4 percent in the first half of the year. Bookings in Montana's Yellowstone National Park are up substantially from their year-ago levels.
Construction and Manufacturing
Conditions in the District's construction industry have been mixed
with the large overhang of office space in the Minneapolis-St. Paul
area depressing local activity. The office vacancy rate in downtown
Minneapolis and St. Paul was 13.6 and 20.1 percent respectively in
the second quarter of this year, and is expected to rise as current
construction projects are completed. The number of housing permits
issued in Minnesota rose by 7 percent in May relative to a year ago,
but was still slightly below its level of two years ago.
Conditions in the District's manufacturing industries appear to be improving. In Minnesota, the total hours worked in manufacturing rose 1.4 percent in April from March, but was still 0.6 percent below its year ago level. The level of new business incorporations in the state was down 6 percent in April from March's all time high, but was still 18 percent above the year ago level. The medical industry is reported to be doing well, while the computer and electronics industries are holding steady, and the aircraft supply industry has slowed.
Resource-Related Industries
Agricultural conditions have been mixed lately with some parts of
the District receiving badly needed moisture while others have been
hurt by excess precipitation. In southern Minnesota, 18 counties
were declared to be a natural disaster area. In Montana, North and
South Dakota, small grains and feed crops are in good shape. Prices
of cereal grains were slightly higher while livestock prices were
lower in June as compared to May. The Montana and Minnesota farm
price indexes were respectively 2.0 and 13 percent lower in June as
compared to a year ago. Ranchers in the District continue to do well
due to cattle prices which are still high despite recent declines.
Conditions in the District's mining and lumber industries have been fairly good. Lower inventories of lumber have led to higher prices.