January 22, 1992
The District's economy has been largely stagnant lately. Labor market conditions generally deteriorated. Retail sales increases were modest, except in those areas that continue to benefit from the influx of Canadian shoppers. New auto sales remain weak, though truck sales have rebounded sharply. Construction and manufacturing conditions were mixed. Agriculture did well, with high crop yields offsetting price declines. Tourism has remained strong.
Employment, Wages, and Prices
The November unemployment rate in Minnesota was 5.0 percent,
slightly higher than its 4.7 percent rate of the month before, but
substantially above its year-ago level of 3.9 percent. The growth of
Minnesota's nonagricultural employment in November was only 0.38
percent over the last year, with declines in all sectors except
government (up 1.02), transportation (up 0.27), and finance,
insurance, and real estate (up 1.36). In particular, manufacturing
(down 1.47), mining (down 1.18), and construction (down 7.68) all
posted substantial declines. The November unemployment rate in
Montana, at 7.4 percent, was also higher than it was a month ago
(6.2) or a year ago (6.8). This weakness was also reflected in the
anemic growth of Montana's nonagricultural employment in November,
up only 0.96 percent from a year ago. The November unemployment rate
at 4.0 percent was higher than its month-ago (3.4) or year-ago (3.3)
levels in North Dakota. November's unemployment rate was higher in
the Upper Peninsula (up to 11.7 percent from 9.8 percent a year ago)
and western Wisconsin. The only part of the District in which the
unemployment rate fell in November was South Dakota, which at 2.8
percent was down only 0.1 percent from the previous month and 0.4
percent from a year ago. South Dakota's economic strength was also
reflected in nonagricultural employment growth which was up 3.0
percent in November relative to a year ago.
Consumer Spending
Holiday retail sales in the District showed very modest growth. A
number of major retailers reported sales increases in comparable
stores ranging from 1 to 6.5 percent in December relative to a year
ago, with discount chains reporting increases of 6 to 16 percent
over the same period. Retailers also reported more frequent bad
checks and shoplifting. Retail sales continued to be 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, and hotel occupancy rates in
these areas were quite high.
New truck sales surged in December with some dealers reporting sales increases of 83 percent in December relative to a year ago. However, year-to-date truck sales were still 9 to 13 percent below last year's level. New car sales in the District improved in December, but continue to be weak, with local dealers of domestic cars reporting year-to-date sales declines ranging from 20 to 25 percent, while foreign car dealers reported flat year-to-date sales in October. Used car sales continue to be strong.
Housing sales improved in the District. In the Minneapolis-St. Paul area, housing sales were up 13 percent in the fourth quarter, and 3.8 percent year-to-date. This was despite the fact that sales fell slightly in December relative to the previous month, and were essentially unchanged from their year-ago level.
Tourist activity has been excellent in the District. Yellowstone National Park had its best year ever. Total bridge crossings onto the Upper Peninsula of Michigan this year have been above their year-ago levels, with crossings over the Mackinac and International bridges in November and December up 4.8 percent and down 0.3 percent, respectively, relative to their year-ago levels. The upcoming Super Bowl is expected to bring $45-$50 million in direct expenditures to the Minneapolis-St. Paul area. Heavy early snow fall got the skiing and snowmobiling seasons off to a good start, but the lack of recent snow has slowed winter recreation considerably.
Construction and Manufacturing
Conditions in the District's construction industry have been mixed.
The November level of new housing permits in Minnesota was down 5.6
percent relative to a year ago, while commercial construction in the
Minneapolis-St. Paul area continues to be depressed. Elsewhere,
construction is reported to be doing well in North and South Dakota,
and holding its own in Montana.
Conditions were mixed in the District's manufacturing industries. In Minnesota, average weekly hours at 40.8 in November were slightly higher than their year and month-ago level of 40.5. In contrast, Minnesota's November average hourly earnings were up only 2.8 percent relative to a year ago.
Resource-Related Industries
High crop yields in the District generally more than offset price
declines in 1991. Dry beans and potato production are at record
levels in both North Dakota and Minnesota. Top soil moisture is in
good condition for spring planting. Recent milder weather has
stirred some concern about spoilage in the sugar beet crop.
Minnesota's mid-December all farm products crop price index was down
1.5 percent relative to its year ago level, with crop prices up 1.0
percent, livestock prices down 17.0 percent, dairy products up 21.6
percent, and poultry products down 2.7 percent over this period.
Uncertainty about future farm income has depressed farm machinery
sales somewhat.
Mining conditions have been mixed in the District. Copper prices are holding firm, but oil and molybdenum prices remain low. The lumber and wood products market is mixed, with problems due to environmental issues anticipated in the near future.