Central Minnesota Economic and Business Conditions Report Third 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 0.72 points in the most recent period, with three components producing positive readings. Increased St. Cloud area residential building permits and higher national durable goods orders had the greatest favorable impact on the leading index in the third quarter. A downturn in the Minnesota Business Conditions Index had the largest negative effect on the LEI. There were 1,432 new business filings with the Office of the Minnesota Secretary of State in Central Minnesota in the third quarter of 2018 — representing a 3.9 percent increase from one year ago. 160 new regional business incorporations were tallied in the third quarter, 3 percent fewer than their year ago level. New limited liability company (LLC) filings in Central Minnesota increased 3.5 percent relative to the third quarter of 2017. New assumed names totaled 370 over the recent quarter—an increase of 6.3 percent compared to the same period in 2017. Current quarter new filings for Central Minnesota non-profit were 15.8 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 third quarter. Results of this voluntary survey indicate that 5.2 percent of new filers come from communities of color. Approximately 6.3 percent of new filings were made by military veterans. About 1.8 percent of new filers come from the disability community and 3.3 percent of new filings were made by the immigrant community. Nearly thirty-nine 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 94 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, transportation/ warehousing, professional/scientific/technical, and other services. Employment levels at most new firms are between 0 and 5 workers, and 45.8 percent of those starting a new business consider this a part-time activity. Central Minnesota employment was 1.7 percent higher in September 2018 than it was one year earlier and the September regional unemployment rate was 2.2%--considerably lower than one year ago. Initial claims for unemployment insurance were 8.5 percent lower in September than they were in the same month last year. The Central Minnesota labor force rose by 0.9 percent and the job vacancy rate surged as the region's labor shortage worsened. Bankruptcies continue to rise in Central Minnesota. Economic performance in the St. Cloud area was mixed. Several components of a future outlook survey of St. Cloud area business leaders conducted quarterly by St. Cloud State University were weaker than one year earlier. Overall new business filings in the St. Cloud area were also lower. Average hourly earnings and hours worked declined and the relative cost of living in St. Cloud rose. On the positive side, employment expanded, the unemployment rate fell, initial jobless claims were lower, the labor force increased, and median home sales prices were higher.