December 9, 1992
Most sectors of the Ninth District economy continue to improve slowly in late fall. Retail sales are strengthening. Residential construction is strong. The 1992 crop is in and generally good, with the exception of wet weather retarding the corn harvest. Prospects for winter tourism appear excellent. Labor markets are slightly stronger. A mid-November Minneapolis Fed poll of business and community leaders reflects this improvement. It showed that most considered their local economy to be better than the nation's and many thought that economic activity would be up in 1993. But manufacturing shows little growth, and mining continues to be slow.
Consumer Spending
Consumers appear willing to spend. Major retailers report improving
sales and stronger profits. Moreover, Advisory Council members and
representatives of retail firms report expectations that holiday
sales will be stronger than in 1991. News media note generally good
sales over the Thanksgiving weekend. For example, the Mall of
America, in a Minneapolis suburb, attracted 170,000 shoppers on the
Friday after Thanksgiving, its second best day since opening in
August.
The district sales office for a domestic auto manufacturer reported sharply stronger auto sales in November and described its outlook for the balance of 1992 as "extremely good." Three Helena Branch directors report strong auto sales or increased dealer profits in their areas.
The winter tourist season appears to be off to a good start. Deer are abundant in Michigan's Upper Peninsula, northern Wisconsin and northern Minnesota and large numbers of hunters are anticipated. Downhill ski resorts are open in Montana and owners anticipate an excellent season, although spotty snow cover has delayed cross- country skiing in eastern areas of the District.
Home Sales and Construction
Construction, especially of homes, is generally strong. An Advisory
Council member from Montana reports that some home contractors are
advising buyers that home orders are backlogged until next summer.
In Minnesota, building permits for September were up approximately
15 percent from a year ago, with virtually all the growth in single-
family residences. Strong residential construction was also reported
in eastern North Dakota and in Wisconsin cities.
Other construction is not as strong. A Minnesota director reports that non-residential building is generally limited to the public sector. Road and heavy construction is slowing seasonally as winter sets in. The severe surplus of office space in Minneapolis/St. Paul has cast a pall on large building construction. One director notes that his firm was laying off senior tradespeople who specialize in constructing tall office buildings.
Manufacturing, Mining and Forestry
Manufacturing shows little growth. September manufacturing
employment for District states was steady or slightly down from a
year earlier except in South Dakota. An Advisory Council member
reports that sales of several Minneapolis/St. Paul manufacturers are
essentially flat, with these firms reaching beyond traditional
markets in an effort to maintain, not improve sales. But forest
products production, especially of plywood substitutes and hardwoods
in the eastern part of the region, is reported strong and one
Council member notes strong sales of machinery to the paper
industry. Furthermore, over half the manufacturers responding to the
Bank poll indicate that their capital spending will be up in 1993.
Mining continues to be slow. Iron mines have temporarily furloughed workers due to lack of orders. New oil and gas drilling permits issued in North Dakota through Nov. 1 were below the level for 1991 and substantially below 1990. Though growing, the average drilling rig count for North Dakota in the year to date is below 1991. Production and refining in Montana and North Dakota are generally unchanged from last year.
Labor Market Conditions
Labor markets are slightly stronger. In November fewer large layoffs
were reported by the media than in the previous two months. Advisory
Council members generally report improved employment conditions. The
mid-November Bank survey of business and community leaders showed 49
percent anticipating that employment would increase in 1993; only 10
percent thought it would fall.
Agriculture
With the exception of corn, the 1992 harvest is largely completed.
Some early snows and wet weather across the region have severely
retarded the corn harvest and hurt quality. Sugar beet producers in
Minnesota and North Dakota report outstanding yields and sugar
content.
Soil moisture and pasture conditions going into the winter are rated at adequate or better across most of the region, with the exception of a few districts in the western Dakotas and Montana.
While milk production is generally unchanged from a year ago, dairy profitability is generally satisfactory due to adequate feed supplies and somewhat stronger milk prices.
Most Advisory Council members report somewhat stronger sales of farm machinery. One from eastern North Dakota noted that his report on machinery sales was "the most positive one in three years." Others report that farmers continue to pay down debt and that land sales had picked up slightly in some areas.