March 4, 2026
Summary of Economic Activity
Economic activity in the Ninth District was down slightly since the previous report. Employment declined slightly and labor demand was mostly unchanged. Prices increased modestly and wage growth was moderate. Consumer spending fell, construction activity was moderately lower, and manufacturing decreased at a moderate pace. Agricultural conditions remained weak. Activity among minority- and women-owned business enterprises declined moderately.
Labor Markets
Employment was down slightly since the last report. Surveys showed that job openings were generally flat, and more firms reported that head counts declined compared with those that reported growth. Firms noted that other challenges dampened the immediate need for labor or the ability to find skilled labor. A North Dakota manufacturer reported that sales were slow, and "we will let attrition take care of any surplus labor we currently have."
A contact from a Minnesota landscape firm said that federal immigration enforcement "was having a significant effect on our staff," who were either staying home or leaving. "We are hiring now to replace these workers or get more reliable alternatives, but there are not any people to hire." But worker demand grew for staffing companies, and employers' outlook for future labor demand was more positive than expected. New unemployment insurance claims rose slightly compared with the same period last year, and continuing claims were unchanged.
Wage growth was moderate, reflecting a slight uptick since the last report. Larger companies generally reported stronger wage increases, often ranging between 3 and 5 percent. A staffing firm with rising demand for industrial temp workers reported a year-over-year wage increase of 3.6 percent. Contacts have also reported rising costs for health-care insurance and new costs related to paid family leave legislation in Minnesota.
Prices
Prices increased modestly, but at a faster pace since the previous report. In a monthly survey, 29 percent of firms increased prices to customers in January from the month earlier, compared with 12 percent that decreased their prices. Meanwhile, 41 percent of firms reported that their nonlabor input prices increased over the month. Expectations for pricing in the month ahead were similar but slightly lower. Some retail contacts reported lowering prices to move inventory amid slowing consumer demand. Insurance rates remained among the biggest concerns for contacts across industries, with significant annual increases. Manufacturing and construction contacts continued to report steep increases in raw materials costs, particularly for aluminum. The wholesale prices component of a regional manufacturing index moderated in January but still pointed to increases.
Worker Experience
Workers' confidence in job security increased slightly in recent weeks, according to a recent survey. Most workers remained confident based on their perceptions of strong business activity, positive hiring trends, and a healthy regional economy. Satisfaction with wages, benefits, and scheduled flexibility dropped modestly. Among job seekers, the time it took to find a job increased slightly compared with a year ago. A great number of immigrant workers in Minnesota were unable to work due to increased immigration enforcement activity. Wage losses threatened their ability to pay for rent, utilities, and other necessities. A workforce development organization offering English classes to new arrivals reported a 43 percent enrollment decline attributed to recent events.
Consumer Spending
Consumer spending fell since the last report. Contacts in retail, accommodation, and leisure saw reduced demand. Rural businesses reported ripple effects from a struggling farm economy. Firms in urban markets, especially Minneapolis–St. Paul, were negatively impacted by increased immigration enforcement actions. Hospitality and tourism firms, among others, said that legal, foreign-born workers were choosing not to work due to safety concerns, which were impacting operations as well as overall customer demand. Still other contacts reported reduced demand stemming from colder-than-normal weather and reduced visits from Canadian and other international travelers. A North Dakota retailer reported that Canadian business went from 20 percent of sales to "zero percent." A District mall reported that traffic so far this year was down 7 percent. A northern Minnesota resort said numerous concerns were affecting consumers' aspirational travel. A South Dakota contact said that "while not everyone is expressing concerns about consumer spending... I don't hear from many who say things are above average."
Construction
Construction activity was moderately lower compared with the same period a year ago. Nonresidential construction drove most of the decline; residential construction declined slightly. A Minneapolis–St. Paul area builder noted that extremely cold weather and activity around immigration enforcement had negatively affected their work. The value of permits for new construction in major markets dropped, mainly due to a decline in nonresidential permits in Minneapolis; a municipal report singled out the value of permits in that city as "the lowest recorded January in the entire decade." Residential construction permits increased overall. Health-care investment continued to boost construction in Rochester, Minnesota.
Services
Activity among professional, technical, and other services firms declined. Notably more survey respondents reported seeing declining versus rising revenues and profits. A technical services consultant in South Dakota said income was falling among clients "and many are planning on downsizing or reducing services." The owner of a professional services firm said client budgets for projects were a fraction of what they were three years ago. "This means my price has to come down yet my input costs remain the same." A consultancy in Minneapolis–St. Paul said that customers were seeing slower activity due to federal immigration activity and it expected "a lagging negative effect in a month or two."
Manufacturing
Manufacturing activity decreased moderately on balance. Results from an annual survey of District manufacturers indicated a contraction in orders, employment, investment, and profits in 2025 from the previous year, while production levels and productivity were flat. Firms expected growth in most indicators in 2026, but the investment outlook was flat. Contacts remained more mixed in evaluations of recent activity; some noted recent rebounds but many reported weak conditions. Those in the agricultural and industrial equipment segments were particularly negative, but some equipment producers noted stronger demand for construction equipment. Meanwhile, a metals fabricator reported a "production recovery" after working through excessive inventories.
Agriculture Energy and Natural Resources
Agricultural conditions remained weak since the last report. According to a recent survey, two-thirds of ag lenders reported that farm incomes decreased in the fourth quarter of 2025 from a year earlier. Contacts reported that producers who were diversified into livestock were holding up better than those heavily concentrated in crops. A contact in the sugar beet segment said that the market was hampered by reduced sugar consumption and sugar import quotas that had not adjusted to demand. District oil and gas exploration activity increased slightly from the last report.
Minority- and Women-Owned Business Enterprises
Activity among minority- and women-owned business enterprises (MWBEs) declined moderately. Several contacts reported negative business impacts from the presence of federal agents in Minnesota, because employees, vendors, and customers alike "were afraid to travel." A recent survey of MWBEs in the Minneapolis–St. Paul area revealed a sharp decline in foot traffic, particularly among retail and food services businesses. Many were increasingly facing challenges to meet their financial responsibilities. Several contacts from Community Development Financial Institutions reported a significant increase in requests for loan modifications coming from affected businesses.
For more information about District economic conditions visit: https://www.minneapolisfed.org/region-and-community.