Central Minnesota Economic and Business Conditions Report First Quarter 2018

Abstract

The Central Minnesota planning area is expected to experience steady economic growth over the next several months according to predictions of the Central Minnesota Index of Leading Economic Indicators (LEI). The leading index rose by 0.94 points in the most recent period, with four components producing positive readings. Decreased St. Cloud area residential building permits are the only component to weigh on this quarter's leading index. An uptick in national durable goods orders, lower regional initial jobless claims, an increase in the Minnesota Business Conditions Index, and an improvement in new filings of incorporation all helped drive the index higher. There were 1,699 new business filings with the Office of the Minnesota Secretary of State in Central Minnesota in the first quarter of 2018 — representing a 7.6 percent increase from one year ago. 196 new regional business incorporations were tallied in the first quarter, 21.7 percent more than year ago levels. New limited liability company (LLC) filings in Central Minnesota increased 9.6 percent relative to the first quarter of 2017. New assumed names totaled 451 over the recent quarter—a decrease of 2.6 percent compared to the same period in 2017. Current quarter new filings for Central Minnesota non-profit were 19.3 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 first quarter. Results of this voluntary survey indicate that 5.4 percent of new filers come from communities of color. Approximately 7.1 percent of new filings were made by military veterans. About 2.1 percent of new filers come from the disability community and 3.2 percent of new filings were made by the immigrant community. Thirty-seven percent of new business filings in Central Minnesota in this year's first 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 110 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Central Minnesota are construction, retail trade, real estate/rental/leasing and other services. Employment levels at most new firms are between 0 and 5 workers, and 41 percent of those starting a new business consider this a part-time activity. Central Minnesota employment was 4.4 percent higher in March 2018 than it was one year earlier and the March regional unemployment rate was 4.8%--considerably lower than one year ago. Initial claims for unemployment insurance were 16.2 percent lower in March than they were in the same month last year. The Central Minnesota labor force rose by 3.7 percent, but the job vacancy rate surged in Central Minnesota. There are now 100.5 job vacancies for every 100 unemployed workers in the region. Regional bankruptcies were essentially unchanged from one year ago. 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 generally improved from one year earlier. Total new business filings in the St. Cloud area were led higher by large increases in new incorporations and LLCs. Employment expanded, the unemployment rate fell, average hours worked rose, initial jobless claims were lower, the labor force increased, and median home sales prices were higher.