| Skip to content
|
As winter sets in, the Ninth District
continues to enjoy moderate economic
growth with few problem areas.
Unemployment remains low, and
indications of very tight labor markets are
widespread. In spite of reports of labor
market tightness and of some wage
increases, there are few reports of price
increases for raw materials, consumer
goods or services. Construction is brisk in
many areas. Iron mining and oil drilling are
very strong and paper production displays
some signs of recovery from the slump
experienced over the last year. Retail sales
of general merchandise apparently are
picking up, and increased strength in vehicle
sales continues. The 1996 crop was
excellent in most respects, the profitability
of livestock production has recovered
somewhat, and farmers reportedly are
increasing their spending on household and
capital items. Manufacturing shows
moderate growth. Tourism is the weakest
sector, continuing a pattern set earlier in
1996.
Employment, Wages, and Prices
"Stores shop for workers," headlined a South
Dakota news article describing the extra
efforts retailers are making to secure
needed seasonal workers in an extremely
tight labor market. Labor scarcity continues
as the most-cited problem confronting
businesses in the district. Reports of
increases in pay or benefits to attract
entry-level workers or skilled technical
specialists remain frequent, but many
employers say there is no generalized
upward pressure on compensation.
Notwithstanding reports of compensation
increases for entry-level and certain
specialist employees, there are few reports
of increases in the prices for goods and
services. Petroleum products are one
exception. Increased fuel prices are cited as
a major cost increase for trucking firms and
a Minnesota-based airline. One Minnesota
chemical product manufacturer cites
increases in the cost of all chemicals derived
from petroleum or natural gas or whose
production is energy intensive. At the
consumer level, milk prices increased
sharply from late September into November,
but farm level milk prices were falling
sharply in late November, and retail prices
are expected to follow shortly.
Construction and Real Estate
"There are quite a few new motels going up
in Sioux Falls." "The 'nuclear winter' is over
in downtown St. Paul commercial real
estate market." "Construction in western
Wisconsin has been at record levels for six
months." "Twin Cities building permits up
15 percent from a year ago." Reports such as
this are widespread, revealing a
construction and real estate sector that still
has stamina after four years of expansion.
The strength is broad-based across
residential, commercial, light industrial and
public infrastructure projects. Regionally,
there are some reports of a slowing pace of
residential construction in western
Montana and eastern North Dakota, areas
that had been strong for three years.
Realtors in Minneapolis-St. Paul report good
business for both residential and
commercial property.
Natural Resource Industries
Iron ore mining and oil drilling continue at
the brisk pace that has prevailed for several
months, and industry spokespersons expect
that pace to continue into 1997. An advisory
council member from Michigan's Upper
Peninsula describes increased production at
a paper mill in his area. Other paper
industry contacts also describe some
expansion of output, but production has not
returned to the high levels experienced two
years ago. Building board producers in the
eastern portion of the district continue
producing near capacity.
One exception to this pattern of strong
activity in natural resources industries is
traditional sawmills in western South
Dakota and Montana, where output
reportedly is stagnant or declining, largely
due to reduced federal timber sales.
Environmental concerns have blocked the
partial reopening of a Michigan copper mine
closed last year.
Manufacturing
"Sales are really pretty good, a bit slow in the
summer, but getting better steadily in the
fall," says one Minnesota electronics
manufacturer. "We are seeing a lot of small
factories coming in, mostly metal
fabrication," says a utility manager from
Michigan's Upper Peninsula. On the whole,
manufacturing in the Ninth District appears
healthy, with good orders and growing
output, but with few bottlenecks or input
shortages. Contacts report generally normal
inventories and no delays or difficulties in
securing raw materials.
Agriculture
"Prices are somewhat better than we had
expected," comments a South Dakota
rancher who believes that the price trough of
the beef cycle was passed last spring and that
both fat and feeder cattle prices will trend
upward in 1997. Higher prices for feeder
cattle are due in part to lower feed costs as
favorable grain yields have put downward
pressure on prices. Grain producers
generally have completed harvesting in most
areas, and yields were excellent and better
than had been expected through the growing
season. Winter wheat seeded in South
Dakota and Montana is generally in good
condition. But the late harvest and early
onset of very cold weather prevented much
fall tillage, and farmers in Wisconsin,
Minnesota and South Dakota will have to
rush to catch up next spring. Overall
production of sugar beets and potatoes in
North Dakota and northwest Minnesota was
also good.
Consumer Spending
There are some indications that consumer
spending has increased in late fall and early
winter. Vehicle sales are described as good
in many areas, with sales of pickup trucks
reportedly very robust in North Dakota,
South Dakota and much of Minnesota.
A large national retailer based in Minnesota
reported improved earnings for the third
quarter compared to somewhat sluggish
performance earlier in 1996. A regional
department store chain also describes
improved sales in October and November.
Reports from advisory council members
around the district indicate general
optimism among retailers in regard to the
holiday season. Some sources indicate
sluggish sales of major
appliances, but say that sales of apparel and
consumer electronics are stronger than in
the first two quarters.
Tourism and Recreation
"Tourism has been down 11 percent this
year," reports a motel owner from Rapid
City, S.D. He is echoed by sources in other
regions, who sketch a general pattern of
lackluster tourist and recreation business
continuing through the year. Western
Wisconsin, where tourism has grown to
match that of better-known scenic areas of
the state, is one exception. The pheasant
hunting season in South Dakota was about
even with 1995. Early snow in northern
areas has been encouraging to businesses
serving cross-country skiers and
snowmobilers.
|
St. Louis