October 23, 1991
Conditions in the Ninth District generally were mixed, but have deteriorated recently in the labor market, where unemployment rates were uniformly higher. Retail sales were fairly strong, but car sales remained weak, while homes sales turned down. Crop yields were mixed, and prices on most agricultural products were sharply lower than a year ago. Tourism remains a major bright spot.
Employment, Wages, and Prices
Reversing their generally positive trend, labor market conditions
deteriorated somewhat in the District. In Minnesota the August
unemployment rate was 4.8 percent, up from 4.6 percent a year ago,
and 0.4 percent higher than the previous month. This weakness in the
Minnesota labor market was also reflected in nonagricultural
employment growth which was up only .56 percent in August relative
to a year ago, with substantial declines being registered in
manufacturing (down 1.52 percent), and construction (down 4.70
percent). In a possible signal that this trend will continue,
initial unemployment claims in Minnesota were also up 13.7 percent
in August relative to their year ago level. In Montana, the August
unemployment rate was 5.8 percent, up from 4.6 percent a year ago
(but down slightly from its July level of 6.1 percent), while the
August nonagricultural employment was 1.03 percent higher than a
year ago. In North Dakota, the August unemployment rate was at 4.3
percent, up from 3.4 percent a year ago, while in South Dakota it
was 3.7 percent, up from 3.3 percent. In both cases, the August
level was somewhat higher than the July level (3.9 and 3.2
respectively for North and South Dakota). South Dakota's
nonagricultural employment was a robust 2.99 percent higher in
August than its year ago level, while in North Dakota it grew by a
respectable 1.43 percent over the same period. The strong employment
growth in South Dakota over this period was led by manufacturing (up
3.43 percent), construction (up 5.80 percent), and trade (up 4.07
percent). In the Upper Peninsula of Michigan the August unemployment
rate was 8.6 percent, up from 8.0 a year ago, but down 0.1 percent
from its July level. Unemployment rates in western Wisconsin, which
are only available through July, were also higher than their year-
ago levels.
Consumer Spending
Retail sales have been fairly strong in the District, with major
retailers reporting sales increases in comparable stores for the
five week period ending October 5 of 5 to 10 percent. Gross sales
tax receipts in Minnesota were up 8.4 percent in August relative to
a year ago, but approximately 0.6 percent of this increase reflects
a rise in the state's sales tax. Retail sales have been strong in
Montana, North and South Dakota, and the Upper Peninsula of
Michigan, which continue to reap the benefits of the influx of
Canadian shoppers.
District new car sales continue to be weak with domestic auto companies reporting sales declines ranging from 9 to 20 percent in September relative to a year ago, and year-to-date sales declines are reported to be even larger. However, truck sales have surged recently with September sales increases reports ranging from 15 to 46 percent higher than a year ago, though year-to-date sales are still well below last year's levels.
Housing sales remain mixed in the District. In the Minneapolis-St. Paul area, housing sales dropped 13.4 percent in September relative to a year ago, after rising in August. The September median single- family home price was up only 3.2 percent from a year ago. This continues the trend of the 1980's in which home prices in Minnesota have failed to keep pace with inflation. In contrast, housing sales were reported to be improving in North Dakota and Montana.
Tourism activity has been excellent in all parts of the District. The number of crossings over the Mackinac Bridge onto the Upper Peninsula of Michigan was 4.2 percent higher for the first nine months of this year. The American League Championship and potential World Series are expected to bring $6 million in direct spending per local game to the Minneapolis-St. Paul area.
Construction and Manufacturing
Conditions in the District's construction industry have been mixed,
with the overhang of office space in the Minneapolis-St. Paul area
expected to continue to depress commercial activity. In addition,
August housing permits in Minnesota were down 8.0 percent relative
to a year ago, and 31.2 percent relative to two years ago.
Elsewhere, construction is reported to be particularly strong in
South Dakota, and to be doing well in Montana and North Dakota.
Conditions were mixed in the District's manufacturing industries, with a number of firms reporting layoffs. However, in Minnesota's manufacturing sector, the August level of average weekly hours (at 40.8) was about the same as a year ago, though higher than in July (40.1), while the level of average weekly earnings was up 3.2 percent in August from a year ago. New business incorporations in the state were also up 7.0 percent in July relative to a year ago.
Resource-Related Industries
Crop yields in the District, with the exception of Minnesota, were
generally good. Excessive precipitation in Minnesota has hurt key
crops (corn and wheat production are expected to be lower than last
year), but apples in particular have benefited. In addition, the
high moisture level combined with a mild winter threatens the
state's corn crop with extensive insect damage. In North Dakota,
crop production estimates or corn and dry beans are sharply higher
than year-ago levels (up more than 40 percent), but food and feed
grain production is expected to decline by 9 percent. In Montana the
wheat crop forecast for 1991 is the highest production level since
1982. Agricultural prices are down sharply. The September level of
the Minnesota index of prices received was 7.8 percent below a year
ago; crop prices were down 4.3 percent, livestock prices were down
13.7 percent, dairy products prices were down 4.6 percent, and
poultry products prices were down 6.3 percent. Potato farmers in
North Dakota are reported to be particularly hard hit by the price
declines.
Mining has been mixed in the District. Despite substantial price declines, year-to-date income from copper, silver, and molybdenum mining was up substantially in Montana from last year. The lumber and wood products market is mixed, with problems due to environmental issues anticipated in the near future.