November 4, 1992
The Ninth District economy improved slightly in early fall following essentially steady to slower conditions in late summer. Weather threats to crops did not materialize and Ninth District directors report good cash returns in agriculture. They also report that the 1992 summer tourist season was strong. Retail chains reported stronger sales. Construction is also an area of tentative strengthening, particularly in infrastructure such as street and sewer improvements. Motor vehicle sales, however, are essentially steady and manufacturing and mining are slow. Labor markets appear to have stabilized.
Consumer Spending
General merchandise spending in the District shows some signs of
strength. Some regional retailers report September sales increases
of 15 to 25 percent compared to the previous year. Such reports are
more positive than Minnesota and South Dakota sales tax remittances
for September, which are reported to be "as projected" at levels
slightly above a year ago.
Motor vehicle sales essentially match sales a year ago. Year-to-date figures for a major domestic distributor show car sales down 2 percent from 1991 but pickup trucks up 4 percent. South Dakota new vehicle titles issued in September and year to date were essentially unchanged from 1991.
The summer tourist season ended on an upbeat note. Directors, an industry association and newspapers report that the season had been "good" to "excellent" in all areas. Sources in South Dakota and Montana rated the season as excellent, though down slightly from records set in 1991. Early news reports from the Upper Peninsula note expectations of favorable game populations and weather conditions leading to good hunting-related business for the fall season.
Home Sales and Construction
Construction shows some signs of reviving. In Minnesota and the
Dakotas, substantial increases in contact awards for infrastructure
such as roads, bridges and water/sewer construction more than offset
slight declines in other building. In Minnesota, construction of
Native American-owned casinos is a major activity with over $100
million of projects in progress or completed so far this year.
Congress recently authorized $19.2 million maintenance and
renovation projects at Air Force bases in Grand Forks and Minot,
N.D. The strong tourist season was cited as motivation for
construction of 300 new motel rooms in Billings, Mont.
Home sales are reported strong in most metropolitan areas. Eau Claire, Wis., and Rapid City, S.D., reported 1992 housing starts 17 percent and 35 percent above 1991 respectively. Duluth, Minn., was an exception, reporting a construction slump and sluggish sales.
Despite these encouraging reports, Minnesota's construction employment declined slightly in September as several major projects were completed, according to employment service officials.
Manufacturing and Mining
Manufacturing activity appears to be slow. Hurricane-induced demand
for building materials, which continues to support forest-product
manufacturing, is an exception reported by directors. A computer
manufacturer announced layoffs and the closing of one plant caused
by disappointing sales. Manufacturing employment numbers for
Minnesota in September were slightly above a year ago.
Mining is lackluster, with low prices for gold and copper limiting profitability in South Dakota and Montana and slack demand for iron ore affecting northern Minnesota. A major gold mine in western South Dakota announced plans to scale back production and offer early retirement to 132 workers.
Labor Market Conditions
Labor markets are largely unchanged. Unemployment rates for August
were slightly higher than the previous month and in August of 1991.
Fewer large layoffs were reported in District media since the last
Beige Book. Layoffs did include 650 employees of a computer
manufacturer, 480 airline employees, 115 defense workers and 142
employees of a hospitality company.
Agriculture
Weather concerns cited in previous reports did not materialize and
conditions in agriculture are generally reported to be good. An
unusually cool, wet growing season delayed crop maturity and
continues to retard harvest operations, but yields for all major
cops except soybeans are generally excellent. Crop prices are
generally stable with wheat and small grain prices generally higher
than last year but corn and soybeans somewhat lower. Overall, gross
revenues per acre are reported to be above 1991 for all major crops
except soybeans. Wheat growers in Minnesota and the Dakotas reported
above average yields. Montana's 1992 wheat crop was down 11 percent
from 1991 due to slightly lower yields and fewer acres planted.
Livestock profitability was generally unchanged to slightly lower. Prices for slaughter livestock were marginally lower compared to the same period in 1991. September dairy prices were higher than in 1991, while poultry and eggs were largely unchanged. Prices for feeder livestock in Montana and the western Dakotas were strong.
With the exception of localized areas affected by frost, hail or drought, agricultural bankers responding to a quarterly survey of agricultural credit conditions reported that farmers generally were able to service their operating loans and continue with debt retirement. Directors noted that investment in new machinery was largely limited to new harvesting machinery needed to cope with the late, unfavorable harvest conditions. Some ranching areas of west- central South Dakota are extremely dry and much of Montana's pasture and range continue below normal condition, but soil moisture in nearly all crop-producing areas of the region is excellent going into the winter.