Central Minnesota Economic and Business Conditions Report Third Quarter 2017

Abstract

The pace of economic growth in the Central Minnesota planning area is expected to slow over the next several months according to predictions of the Central Minnesota Index of Leading Economic Indicators (LEI). The leading index fell by 3.28 points in the most recent period, with two components producing negative readings. A decline in a general measure of statewide business conditions and a recent slowing of St. Cloud area residential building permits contributed to this quarter's decline in the LEI. On the positive side were an uptick in national durable goods orders, lower regional initial jobless claims, and increased new filings for business incorporation. There were 1,378 new business filings with the Office of the Minnesota Secretary of State in Central Minnesota in the third quarter of 2017 — representing a 15.7 percent increase from one year ago. There were 165 new regional business incorporations in the third quarter, a 41 percent rise from year ago levels. New limited liability company (LLC) filings in Central Minnesota increased 17.8 percent relative to the third quarter of 2016. New assumed names totaled 348 over the recent quarter—an increase of 1.5 percent compared to the same period in 2016. Current quarter new filings for Central Minnesota non-profit were 26.7 percent higher than one year ago. Sixty-seven percent of new business filers in the Central Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year's third quarter. Results of this voluntary survey indicate that 4.9 percent of new filers come from communities of color. Approximately 5.7 percent of new filings were made by military veterans. About 2.5 percent of new filers come from the disability community and 3.2 percent of new filings were made by the immigrant community. Forty-one percent of new business filings in Central Minnesota in this year's third quarter were initiated by women. MBS results also show that most new business filers in Central Minnesota have between 0 and $10,000 in annual gross revenues (although 67 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Central Minnesota are construction, retail trade, and other services. Employment levels at most new firms are between 0 and 5 workers, and 43 percent of those starting a new business consider this a part-time activity. Central Minnesota employment was 2.7 percent higher in September 2017 than it was one year earlier and the September regional unemployment rate was 2.9%--much lower than one year ago. Initial claims for unemployment insurance were 18.9 percent lower in September than they were in the same month last year. The Central Minnesota labor force rose by 1.8 percent over the past year but the rate of job vacancies rose. Regional bankruptcies inched up slightly. Economic performance in the St. Cloud area was strong. The future outlook from a survey of St. Cloud area business leaders conducted quarterly by St. Cloud State University was improved from one year earlier. Three out of five measures of St. Cloud area new business filings rose, employment expanded, the unemployment rate fell, average hours worked and the average weekly wage each increased, initial jobless claims were lower, and median home sales prices were up.