Northeast Minnesota Economic and Business Conditions Report - Third Quarter 2016

A deceleration of economic growth in Northeast Minnesota is expected over the next several months according to the predictions of the Northeast Minnesota Index of Leading Economic Indicators (LEI). Two of the five components of the LEI increased as the overall index fell by 1.36 points in the third quarter. An increase in new filings of incorporation in the Northeast Minnesota planning area and lower initial jobless claims had a positive impact on the LEI, while recent weakness in a general measure of statewide business conditions and a fall in a supply managers’ survey helped drive the index lower. A decline in the number of Duluth area residential building permits also weighed on the index. There were 479 new business filings with the Office of the Minnesota Secretary of State in Northeast Minnesota in the third quarter of 2016 — representing a 2.6 percent increase from one year earlier. Forty-eight new regional business incorporations were filed in the third quarter—a 4.3 percent rise from 2015. New limited liability company (LLC) filings in Northeast Minnesota rose 10.6 percent to a level of 271. New assumed names totaled 134 in the third quarter—a 15.7 percent reduction from the third quarter of 2015. There were 26 new filings for Northeast Minnesota non-profit in the 2016 third quarter—nine more than one year earlier. Northeast Minnesota employment was 2 percent lower than year ago levels in September. The regional unemployment rate was 5% (up from 4.6% one year ago) while the labor force contracted by 2,675, a 1.6% decline from one year earlier. September 2016 initial claims for unemployment insurance were 123 higher than the year earlier (a 13.4 percent increase). Job vacancies increased to 78.59 per 100 unemployed in the most recent quarter for which data are available. Northeast Minnesota bankruptcies continued to slowly decline in this year’s third quarter. Economic activity in the Duluth/Superior Metropolitan Statistical Area (MSA) was mixed. Northeast Minnesota’s largest market experienced a 0.4 percent increase in overall employment over the year ending September 2016. It also added employment in its key education/health sector. Average weekly work hours also rose. However, average hourly earnings fell. The area unemployment rate rose to 4.7 percent and the labor force contracted. The value of residential building permits decreased in September compared to the same period in 2015