Central Minnesota Economic and Business Conditions Report Second Quarter 2018

Abstract

Continued steady economic growth is expected in the Central Minnesota planning area over the next several months according to predictions of the Central Minnesota Index of Leading Economic Indicators (LEI). The leading index rose by 1.30 points in the most recent period, with three components producing positive readings and one index value that was largely unchanged. A downturn in the Minnesota Business Conditions Index is the only LEI component to have a measurable negative reading in the second quarter. Increased St. Cloud area residential building permits contributed to this quarter's higher LEI as did higher national durable goods orders and lower regional initial jobless claims. There were 1,580 new business filings with the Office of the Minnesota Secretary of State in Central Minnesota in the second quarter of 2018 — representing a 9.7 percent increase from one year ago. 133 new regional business incorporations were tallied in the second quarter, 10.1 percent fewer than their year ago level. New limited liability company (LLC) filings in Central Minnesota increased 10.9 percent relative to the second quarter of 2017. New assumed names totaled 436 over the recent quarter—an increase of 16 percent compared to the same period in 2017. Current quarter new filings for Central Minnesota non-profit were 1.9 percent higher than one year ago. Sixty-six percent of new business filers in the Central Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year's second quarter. Results of this voluntary survey indicate that 5 percent of new filers come from communities of color. Approximately 8.1 percent of new filings were made by military veterans. About 2.3 percent of new filers come from the disability community and 3.5 percent of new filings were made by the immigrant community. Forty percent of new business filings in Central Minnesota in this year's second 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 100 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 47.2 percent of those starting a new business consider this a part-time activity. Central Minnesota employment was 3.4 percent higher in June 2018 than it was one year earlier and the June regional unemployment rate was 3%--considerably lower than one year ago. Initial claims for unemployment insurance were 13.9 percent lower in June than they were in the same month last year. The Central Minnesota labor force rose by 2.5 percent and average weekly wages were 3.7 percent higher than one year earlier. Regional bankruptcies have begun to rise in Central Minnesota. Economic performance in the St. Cloud area was mostly favorable. 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 of incorporation, assumed name and LLC were all higher in the St. Cloud area. Employment expanded, the unemployment rate fell, initial jobless claims were lower, the labor force increased, and median home sales prices were higher. However, average hourly earnings and hours worked were lower and the cost of living in St. Cloud inched up.