Northeast Minnesota Economic and Business Conditions Report Third Quarter 2017

Steady 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 rose 2.59 points in the third quarter. An improvement in a supply managers’ survey and lower initial jobless claims in the region helped lift this quarter’s index. There were 491 new business filings with the Office of the Minnesota Secretary of State in Northeast Minnesota in the third quarter of 2017 — representing a 2.5 percent increase from one year earlier. Forty-nine new regional business incorporations were filed in the third quarter—2.1 percent more than in the same period of 2016. New limited liability company (LLC) filings in Northeast Minnesota rose 1.5 percent to a level of 275. New assumed name filings increased 6.7 percent and there were two fewer non-profits filings compared to one year earlier. Sixty-seven percent of new business filers in the Northeast Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s third quarter. Results of this voluntary survey indicate that 2.7 percent of new filers come from communities of color, while 7.6 percent of new filings come from veterans. About 1.5 percent of new filers come from the disability community and less than 1 percent of new filings are made by the immigrant community. Forty-three percent of new business filings in Northeast Minnesota in this year’s third quarter were initiated by women. MBS results also show that most new business filers in Northeast Minnesota have between 0 and $10,000 in annual gross revenues (although 30 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Northeast Minnesota are construction, retail trade, other services, real estate/rental/leasing and arts/entertainment/ recreation. Employment levels at most new firms are between 0 and 5 workers, and nearly half of those starting a new business consider this a part-time activity. Northeast Minnesota employment was 2.7 percent higher than year ago levels in September. The regional unemployment rate was 3.8% (considerably lower than one year ago) and the labor force rose by 1.1% from one year earlier. September 2017 initial claims for unemployment insurance were nearly 21.9 percent lower than the same month last year. The region’s job vacancy ratio surged in the second quarter of 2017. Annual bankruptcies in Northeast Minnesota have started to inch up. Economic activity in the Duluth/Superior Metropolitan Statistical Area (MSA) was mixed. Northeast Minnesota’s largest market experienced a 1.3 percent increase in overall employment over the year ending September 2017, but education/health and manufacturing sector employment fell. The area unemployment rate fell to 3.7 percent, and the labor force rose 1.2 percent. Average weekly work hours fell 2.1 percent and average hourly earnings declined. The value of residential building permits jumped 57.1 percent compared to September 2016