Beige Book Report: Minneapolis
December 4, 1991
Labor market conditions in the District were mixed, with the western states showing signs of strength, while the rest of the District continued to be depressed. Retail sales in areas which haven't benefited from the continuing influx of Canadian shoppers stayed stagnant, while new car sales remained in the doldrums. Tourism has generally been excellent this year and looks promising for the winter as well. Crop yields in the District, with the exception of Minnesota, have been generally good, though farm prices have been mixed.
Employment, Wages, and Prices
Continuing its recent negative trend, Minnesota's unemployment rate
in September, at 5.2 percent, was higher than both its year ago (4.7
percent) and month ago (4.8 percent) levels. State unemployment
insurance claims for September were at their highest level since
1983, up 15 percent from a year-ago. The weakness in the Minnesota
labor market was also reflected in the growth rate of
nonagricultural employment, which in October was up only 0.5 percent
from its year-ago level, with substantial declines being registered
in manufacturing (down 1.3 percent), and construction (down 4.3
percent). September unemployment rates were also higher in the Upper
Peninsula of Michigan (9.0 percent from 7.8 percent a year ago) and
generally higher in western Wisconsin. Unemployment rates were
unchanged from their year-ago levels in North and South Dakota (3.5
and 3.2 percent, respectively), and slightly lower in Montana (down
to 5.8 percent from 5.9 percent). These states also exhibited robust
rates of growth in nonagricultural employment, with September's
level up 2.4 and 3.1 percent in North and South Dakota respectively,
and up 1.9 percent in Montana.
Consumer Spending
Retail sales have been stagnant in those parts of the District which
aren't near the Canadian border, with major retailers reporting
October sales figures generally only moderately higher than the
level of a year ago. Retailers attributed the weak sales to consumer
caution, and expectations for the holiday season range from flat to
3 percent growth over last year. Retail sales are strong in those
parts of Montana, North and South Dakota, and the Upper Peninsula of
Michigan within a reasonable drive from the border, due to the
continuing influx of Canadian shoppers. Hotel occupancy rates in
these areas are quite high. Canadian currency transactions in
northwestern Montana are reported to be up more than 20 percent over
last year. The recent World Series generated approximately $15
million of business in the downtown Minneapolis-St. Paul area.
New car sales in the District continue to be weak, with local dealers reporting substantial declines. Even floor traffic on dealer showrooms remains slow. Truck sales have not fallen off as much as car sales, and have enjoyed a recent surge, although year-to-date sales figures are still below that of one year ago. Used car sales remain strong.
Housing sales have been 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, while median single- family home prices, "failed to keep pace with inflation." However, there are some recent indications of an improvement.
Tourist activity has generally been excellent in the District. Yellowstone National Park had its best tourism year ever. Bridge crossings onto the Upper Peninsula of Michigan have been up substantially this year, with crossings over the Mackinac bridge in October 4.7 percent above their year-ago level. Late fall traffic to view the autumn colors on Minnesota's North Shore is down slightly from a year ago, due to weather conditions in October.
Construction and Manufacturing
Conditions in the District's construction industry have been mixed.
The September level of new housing permits in Minnesota was down
10.3 percent relative to a year ago. Commercial construction in the
Minneapolis-St. Paul area continue to be depressed. Elsewhere,
construction is reported to be particularly strong in North and
South Dakota, and holding its own in Montana.
Conditions were mixed in the District's manufacturing industries, with a number of firms reporting layoffs. In Minnesota, average weekly hours at 40.4 in October were essentially unchanged from a year ago, and down only slightly relative to 40.9 in September.
Resource-Related Industries
Crop yields in the District with the exception of Minnesota were
generally good, while crop prices improved and livestock prices
declined relative to year-ago levels. North Dakota's mid-October
index of farm prices was 2 percent below its year-ago level, with
the All Crop index up 1 percent and the All Livestock index down 8
percent from their year-ago levels. Montana's October price index
for all farm products, all crops, and all livestock was up 1
percent, up 14 percent and down 4 percent respectively over year-ago
levels. The recent 30 inch snowstorm coupled with spring floods
resulted in a 7 percent decline in the Minnesota corn crop and an
anticipated 50 percent decline in the wheat harvest relative to year
ago levels. However the state's soybean, sugar beet, potato, and dry
bean crops are projected to be substantially above year-ago levels.