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In late spring, the Ninth District economy continues to enjoy moderate growth in most sectors with few economic problems reported by any source. Construction firms describe a fifth consecutive busy season, with strong residential and heavy construction reported in many areas. Retail sales of general merchandise and vehicles are brisk according to most reports, and summer tourism and recreation business is apparently off to a good start. Manufacturing firms continue to report good sales with few supply bottlenecks. Iron mining and oil production are strong, while forest product output is largely steady. Although crop planting and development have been somewhat retarded, the overall outlook is favorable. Beef producers are receiving higher prices, bringing relief to beleaguered ranchers and their lenders. Hog prices have risen, with strong export demand and reduced numbers on farms, and some packers face difficulty in procuring enough hogs to keep slaughter lines running at capacity. Unemployment rates remain low in most regions, and employment numbers high. Product prices show little increase.
A few problems are visible. Many firms report some degree of wage pressure, and some are unable to find all the qualified workers they need. Corrugated cardboard manufacturers have slowed production in response to low prices. Areas of the Red River Valley in Minnesota and North Dakota continue to clean up after flooding, and output remains below usual levels for many firms in the Grand Forks metropolitan area.
Construction and Real Estate
"There is a lot of work available," reports a construction trade publication, noting a 10 percent increase in publicly let contracts in Minnesota and the Dakotas for the first four months of 1997, compared to the same period in 1996. "Construction will be a banner year," says a Wisconsin building trade union spokesperson. "We are scheduled tight," is the comment of a South Dakota home builder. With the exception of western Montana, where immigration from other states has slackened from earlier in the 1990s, construction is strong in most regions of the economy and in public, commercial and residential categories.
Markets for existing real estate are also brisk. "It's really a sellers' market," says one St. Paul suburban residential realtor. Commercial property rental markets also are active.
Natural Resource Industries
Oil and gas drilling continues at about year-ago levels. An industry journal reports that exploration has spread from one specific geologic formation in western North Dakota to a broader complex of formations covering a larger area, and that while new drilling may not match the intense pace set in mid-1996, it is expected to continue for several years. Iron mines around Lake Superior continue to run at capacity. Oriented-strand board plants have returned to normal production levels after some voluntary stoppages in late winter in response to excess inventories. Paper industry sources report moderate demand for most grades. Output is weakest in packaging materials, and one Minnesota plant that produces corrugated cardboard, largely from recycled materials, announced an indefinite shutdown of most of the plant.
Manufacturing and Business Services
"Sales are great," reports a regional manager for a hardware-software integrator based in Minnesota. "We have plenty of work," says a metal-treating firm owner. "Running full out," is the word from a ceiling tile plant manager. Such reports, buttressed by generally strong sales and earnings reports from publicly traded companies, outline a strong manufacturing sector. Several plant expansions, including baking machinery, farm implements and circuit boards, have been announced recently. Two new teleservices operations have opened, one in LaCrosse, Wis., the other in Dickinson, N.D. On the negative side, one old poultry processing plant in southern Minnesota will close, with the loss of 420 jobs.
Agriculture
Despite some problems, crop conditions in the district are generally good. Unseasonably cold weather persisted through much of May, delaying field work and slowing plant growth. Stages of development for some crops lag usual levels in many areas, but are catching up with more favorable weather in early June. Excess moisture remains a problem in areas of North Dakota, where state officials estimate some 1.1 million acres, about 4 percent of that state's cropland, will not be planted to any crop this year. Some areas of east-central South Dakota had very late planting, but crop conditions in Montana, most of Minnesota and western Wisconsin are quite favorable. One concern is the poor condition of many alfalfa fields, and hay prices are hitting record levels in some areas.
Ranchers reportedly are optimistic about prices after three difficult years, and pasture conditions have improved in recent weeks. Montana bankers indicate that their ranch customers should do somewhat better this year than last. Hog prices have increased, in large measure due to export demand from Asia, and packers report difficulty in securing enough hogs to keep kill facilities running at efficient levels. One packer in Sioux Falls, S.D., is temporarily laying off one shift due to difficulty in securing enough hogs.
Consumer Spending and Tourism
"I believe consumer confidence is high -- and for good reason," says a senior manager at a Minneapolis-based national retailer, explaining his firm's continuing robust sales. Appliances are reportedly selling well in several cities, as well as apparel, sports and recreation products and other general merchandise.
"It seems like there's a lot more people in the market this year than last," comments the general manager of a Minneapolis area car dealership. Other cities around the district also have generally strong auto sales, but in rural areas or smaller towns, sales reports vary greatly with specific local economic conditions.
Despite unpleasantly cool weather for the Minnesota fishing opener, camps, parks, and resorts report generally good business early in the season. Inquiries are up in some states, and tourist operators are generally in a positive frame of mind.
Employment, Wages, and Prices
"No one even answers our ads," is the lament of one St. Paul, Minn., printer trying to hire additional workers. "All applicants already have jobs," says the owner of a chemical firm, "they are trying to move up to something better." "It is extremely difficult to find and hire well-qualified people," comments a South Dakota feedlot owner. Such remarks are common in all parts of the district, except Montana. Employers also report wage pressures for many skilled blue-collar specialties including most construction trades, auto mechanics and machinists. Many note a continuing move to extend benefits to groups of workers previously not covered. One Wisconsin contractor reportedly paid full wages to an idle crew for three weeks between jobs, just to avoid losing them to competitors.
In contrast to labor markets, where reports of wage pressures are common, few price increases are evident. One manufacturer noted that supplies of chlorine and plastic resins are tight and their prices up, but said the impact of this was partially offset by declines in the cost of packaging. Fuel prices continue 5 cents per gallon below year-ago levels.
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