August 5, 1992
Economic conditions in the Ninth District declined somewhat. Labor markets, which had been showing modest signs of improvement, deteriorated. Retail sales continued to exhibit only modest growth relative to last year's level. Home and truck sales were relatively strong, while automotive sales were reported to have fallen off recently. Manufacturing was steady to positive in the District, while conditions in the construction sector were mixed. Conditions in the agricultural sector could become quite positive if the weather turns warmer this summer after a cool, wet first half.
Employment, Wages, and Prices
Unemployment rates rose across almost the entire District in May
relative to their year-ago and month-ago levels. The only exceptions
to this pattern were the Upper Peninsula where rates were
substantially lower than their month-ago level, and western
Wisconsin where unemployment rates were mixed. There have been a
number of layoffs in the District, suggesting that unemployment may
continue so be high when June and July figures become available.
Also consistent with the rise in unemployment was the moderate
growth in nonagricultural employment in May. June numbers are
available only for Minnesota where nonagricultural employment was
only 1 percent higher than its year-ago level. On the slightly
brighter side, a recent study ranked the Minneapolis-St. Paul area
fourth best in terms of job creation in a metropolitan area over the
past year; however, this may be more a sign of national weakness
than of local strength.
Reported increases in prices and wages continue to be moderate with the exception of medical costs and, in parts of the District, construction costs. A major food distributor in the District reports that their index of retail food prices actually declined in recent months.
Consumer Spending
Consumer spending in the District is generally moderate with some
areas of strength. Major retailers in the District reported sales
increases in comparable stores in June ranging from 2 to 17 percent
relative to a year ago. Sales in rural areas are reported to be slow
due in part to uncertainty over local agricultural conditions.
Montana, however, reported a decline in their Canadian business.
Canadian shopping continues to be strong in North Dakota, with retail outlets in shopping malls reporting substantial year-to-date sales increases relative to a year ago The Canadian government has sought to stem the cross-border flow. Recent regulations on appliance sales and service are reported to be having some effect on discouraging appliance sales. Additionally, in June the Canadian government agreed to collect provincial taxes on liquor and tobacco brought across the border. These factors, along with the greater driving distance involved, may explain Montana's recent declines in both Canadian sales and traffic.
New car and truck sales were reported to be stronger in the District in June than they were in the nation as a whole. However, figures for the first part of July indicate that sales have slowed somewhat, with some dealers reporting sales declines of over 15 percent for the first 20 days of July relative to year-ago levels. Truck sales, which have been strong in the District, are reported to be holding up better with sales in the first part of July reported to be slightly above their year-ago level.
Home sales which sagged in April and May after being quite strong in the first quarter, rose in June. Existing home sales in the Minneapolis-St. Paul area rebounded by 18 percent in June, relative to a year ago, though the median sales price was down slightly from a year ago. The housing market is reported to be booming in parts of Montana, due in part the continuing influx of wealthy out-of-state buyers.
The summer vacation season is well under way and despite the cool wet weather, indications are generally good. Tourism in the District is being aided by special events and local government spending to promote it. By way of example, there was a five day International Polkafest which attracted 10,000 people to Chisholm, Minnesota, and the Country Fest which attracted 80,000 to 100,000 people over a four day period to Eau Claire, Wisconsin. Glacier National Park is reported to be completely booked for the summer. Though crossings over the Mackinac Bridge onto the Upper Peninsula were off by almost 2 percent in June relative to a year ago, their year-to-date level is still 4.2 percent higher.
Construction and Manufacturing
Construction was mixed, with reports that it was booming in Montana
and North Dakota, while from other parts of the District there were
more negative reports. In Minnesota, total housing permits in May
were down by 10 percent relative to a year ago. Commercial
construction in the important Minneapolis-St Paul area continues to
show weakness due to the overhang of commercial real estate.
Conditions improved slightly in the District's manufacturing sector. The May level of average weekly hours in manufacturing in Minnesota of 40.5 was above its year- and month-ago level of 39.9. The June level of the Minneapolis-St. Paul area's average hourly earnings in manufacturing was up 2.5 percent from a year ago.
Resource-Related Industries
Conditions were mixed in the agricultural sector. Recent cool
weather has slowed crop growth, however the precipitation that
accompanied it has been most welcome. The fall harvest depends on
how warm August turns out. There has been some hail damage in a few
spots. The North Dakota mid-June index of prices received on farm
products was up 4 percent from its year-ago level, with crop price
increases of 13 percent and livestock price decreases of 8 percent.