May 6, 1992
The District continued to show modest signs of recovery. Labor market conditions generally strengthened. Consumer spending showed substantial signs of improvement with retail sales doing fairly well, auto and truck sales picking up, and home sales showing a strong upsurge. Conditions in the District's manufacturing sector remained even, while those in the construction sector show signs of improving. Conditions in the resource-related industries were mixed.
Employment, Wages, and Prices
The slight reduction in unemployment rates around most of the
District appears consistent with the reduction in the number of
sizable layoffs that are being reported. The February unemployment
rate fell in Minnesota to 5.3 percent from 6.0 percent the previous
month, well below its year-ago level of 6.5 percent. In North Dakota
the February unemployment rate of 5 0 was half-a-percent lower than
the month before, but still above its year-ago level of 4.8 percent.
In Montana the February rate of 8.3 percent was substantially below
the previous month's 9.2 percent, but still above its year-ago level
of 7.7 percent In South Dakota the February unemployment rate of 3.4
percent was below its month- and year-ago level of 3.7 percent. In
the Upper Peninsula of Michigan the February rate of 13.1 percent
was above both its month-ago level of 12.4 percent and its year-ago
level of 12.2 percent, while in western Wisconsin changes in various
local unemployment rites were mixed relative to their year-ago
levels.
Our Directors report that wage and price pressures have generally been modest around the District. One exception continues to be the rising cost of health care. Recently, the state of Minnesota enacted a health rights bill. This bill, besides providing broad insurance coverage to 400,000 presently uninsured citizens, attempts to limit price increases for medical services.
Consumer Spending
Despite the fact that this year Easter fell in April and not March
as it did last year, retail sales in March were generally good
relative to a year ago. Sales in comparable stores are reported to
range from a slight reduction to increases as high as 24 percent
over March sales last year. Inventories are reported to be in line,
and retailers' outlook for May and June is generally optimistic.
Part of the March sales are due to the continuing strong Canadian
consumer demand in areas close to the border.
New car and truck sales continued above their year-ago levels in the District. However, the recent strike of mechanics at unionized car dealerships in the Minneapolis-St. Paul area has dealers concerned that this may keep some buyers away. Dealers' reports on year-to- date sales of new trucks relative to a year ago range from even to 10 percent higher. New car sales also have improved in the District. One major manufacturer reported that sales in the region set a record in March. Dealers reports of new car sales in the District during the first 10 days of April relative to their year-ago levels ranged from even to 20 percent higher, with year-to-date sales reported to range from slightly below to 2 percent above their year- ago levels.
Home sales continue to improve in the District. March sales of existing single-family homes in the Minneapolis-St. Paul metropolitan area were up 23 percent over a year ago. The Twin Cities year-to-date sales figure is 36 percent above its year-ago level.
We are between seasons in the tourist industry, though the general positive trend we have been reporting appears to be continuing. Crossings over the Mackinac Bridge onto the Upper Peninsula of Michigan established a new record for the month of March, and the total number of crossings in the first quarter of 1992 were up 7 percent from a year ago. The NCAA basketball Final Four tournament brought an estimated $40 million to the Minneapolis-St. Paul metropolitan area.
Construction and Manufacturing
Residential construction was generally strong in the District. The
level of new housing permits issued in Minnesota urged in February,
up nearly 50 percent over a year ago. Conditions in commercial
construction were mixed with the important Minneapolis-St. Paul area
continuing so show weakness due to the overhang in office space.
Commercial construction was also reported to be slow in western
Wisconsin. However, commercial construction was reported to be
strong in several other parts of the District. Employment in
construction in February relative to its year-ago level was
generally higher with increases ranging from 3 percent in western
Wisconsin to 23 percent in Montana. The one exception was Minnesota,
which posted a 4 percent decline.
Conditions were generally steady to improving in the District's manufacturing sector. The February level of average weekly hours in manufacturing in Minnesota of 40.4 was slightly higher than its year-ago level of 39.8, but down 1/10th of a percent from the previous month. The February level of Minnesota's average hourly earnings in manufacturing was 4 percent higher than a year ago. Employment levels in manufacturing were unchanged in February relative to a year ago in Minnesota and Montana, down 1 percent in North Dakota, and up 7 percent in South Dakota.
Resource-Related Industries
Conditions in the District's agricultural sector have been fairly
good though prices have generally declined. North Dakota's mid-March
All Farm Products index of prices received by farmers declined 2
percent both relative to February and its year-ago level. The recent
cool, damp weather has hampered planting in parts of the District,
but the precipitation was generally welcome.
The lumber industry continues to decline due to a shortage of trees available for harvesting, particularly on public land. Minnesota is expected to sell only half to one-third of its normal amount of timber. Nonetheless, saw mills are managing to acquire sufficient lumber to maintain operations. The recent trade levy on Canadian lumber along with the upsurge in housing construction has raised prices.
Production in the District's mining industry is largely unchanged from a year ago, though copper production is reported to have risen. Prices have weakened with regard to certain minerals such as taconite and gold.