Southwest Minnesota Economic and Business Conditions Report - Second Quarter 2016

A steady improvement in economic conditions in Southwest Minnesota is expected over the next several months according to the predictions of the St. Cloud State University (SCSU) Southwest Minnesota Index of Leading Economic Indicators (LEI). While three of four LEI components were negative in the second quarter, a decline in initial jobless claims in recent months helped keep the index in positive territory in the second quarter. After rising 3.14 points in the first quarter, the Southwest Minnesota LEI increased by 1.27 points in the current quarter. A weakness in the rural outlook, some sluggishness in new business filings earlier in the year, and a smaller number of residential building permits in Mankato earlier in 2016 served as a drag on the leading index in the second quarter. Like elsewhere around the state, the overall economic outlook in Southwest Minnesota is one in which growth is expected, albeit at a rate that is slower than normal. There were 697 new business filings with the Office of the Minnesota Secretary of State in Southwest Minnesota in the second quarter of 2016 — representing 7.9 percent more new filings than one year earlier. There were 56 new regional business incorporation filings in the second quarter, a 5.1 percent reduction over last year’s second quarter. New LLC filings in Southwest Minnesota rose by 14.5 percent—increasing to 411 in the second quarter of 2016. New assumed names totaled 194 in the second quarter—3 percent fewer filings than in June 2015. There were thirty-six new filings for Southwest Minnesota non-profit in the second quarter—eight more than one year earlier. Employment of Southwest Minnesota residents declined by 1.2 percent over the year ending June 2016. 2,545 fewer Southwest Minnesota residents have jobs than did one year earlier. The regional unemployment rate was 4.1 percent in June, an increase from a 3.8 percent reading in June 2015. Initial claims for unemployment insurance rose by 158 from year-ago levels in June—a 12.9 percent increase. The Southwest Minnesota labor force contracted by 2,055 (a 0.9 percent decrease) over the year ending June 2016. The average weekly wage in Southwest Minnesota rose at a 4.3 percent rate to a level of $783 in the fourth quarter of 2015. Southwest Minnesota bankruptcies have begun flattening out at historically low levels in recent quarters. There was a mostly favorable economic performance in the Mankato/North Mankato Metropolitan Statistical Area (MSA)—the largest market in Southwest Minnesota—in the most recent quarter. On the positive side, average hourly earnings rose, employment increased, the labor force expanded, total new business filings rose, the value of building permits accelerated, and the relative cost of living declined. This was partially offset by a decline in the length of the workweek, higher initial jobless claims, and a larger unemployment rate