Southwest Minnesota Economic and Business Conditions Report Third Quarter 2017

Steady economic growth in Southwest Minnesota is expected over the next several months according to the predictions of the St. Cloud State University Southwest Minnesota Index of Leading Economic Indicators (LEI). Two of four LEI components were positive in the third quarter. An increase in residential building permits in the Mankato MSA and lower jobless claims in Southwest Minnesota contributed favorably to the LEI in the third quarter. A decrease in new business filings of incorporation and LLC and a weaker rural Minnesota economic outlook weighed on the leading index in the current quarter. After falling by a revised 4.82 points in this year’s second quarter, the Southwest Minnesota LEI rose by 4.64 points in the current quarter. There were 556 new business filings with the Office of the Minnesota Secretary of State in Southwest Minnesota in the third quarter of 2017 — representing 2.2 percent more new filings than one year ago. There were 36 new regional business incorporation filings in the third quarter, a 10 percent decrease from last year’s third quarter. New LLC filings in Southwest Minnesota rose 1.6 percent from one year earlier and new assumed names climbed to 174—a 6.7 percent increase compared to September 2016. There were 24 new filings for Southwest Minnesota non-profit in the third quarter—the same number of filings as one year earlier. Fifty-five percent of new business filers in the Southwest Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s third quarter. Results of this voluntary survey indicate that 1.6 percent of new filers come from communities of color. Approximately 4.9 percent of new business filings are from veterans. A little over 1.3 percent of new filers come from the disability community and 2.6 percent of new filings are made by the immigrant community. Forty percent of new business filings in Southwest Minnesota in this year’s third quarter were initiated by women. MBS results also show that most new business filers in Southwest Minnesota have between 0 and $10,000 in annual gross revenues (although 31 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Southwest Minnesota are construction, retail trade, and other services. Employment levels at most new firms are between 0 and 5 workers, and 57 percent of those starting a new business consider this a part-time activity. Employment of Southwest Minnesota residents increased by 2.1 percent over the year ending September 2017. The regional unemployment rate was 2.9 percent in September, a decrease from a 3.5 percent reading in September 2016. More than 400 fewer initial claims for unemployment insurance were reported compared to year-ago levels in September-a 36 percent decrease. The job vacancy rate in Southwest Minnesota surged even though the regional labor force grew by 1.5 percent over the year ending September 2017. Bankruptcies fell over the recent twelve month period in Southwest Minnesota. Economic performance in the Mankato/North Mankato Metropolitan Statistical Area (MSA)—the largest market in Southwest Minnesota—was generally favorable in the most recent quarter. Initial jobless claims fell, employment rose, the unemployment rate was lower, average hourly earnings rose, the size of the labor force expanded, the value of residential building permits increased, and new business filings were higher. The only negative factors were a decline in average weekly work hours and an increase in the relative cost of living in Mankato/North Mankato