Central Minnesota Economic and Business Conditions Report - Third Quarter 2016

The Central Minnesota planning area is expected to experience a slowing of economic growth over the next several months according to predictions of the Central Minnesota Index of Leading Economic Indicators (LEI). The leading index fell by 2.90 points in the most recent period, with three components producing negative readings. Weakness in a general measure of statewide business conditions along with slowing residential building permits in the St. Cloud area helped tip the index down this quarter. An increase in initial jobless claims in Central Minnesota also had a negative impact on the LEI in the third quarter. An uptick in national durable goods orders contributed favorably to the regional outlook while new business filings of incorporation in the Central Minnesota planning area were largely neutral. There were 1,191 new business filings with the Office of the Minnesota Secretary of State in Central Minnesota in the third quarter of 2016 — representing a 0.8 percent increase from one year ago. There were 117 new regional business incorporations in the third quarter, a 2.6 percent increase from year ago levels. New limited liability company (LLC) filings in Central Minnesota increased 2.5 percent relative to the third quarter of 2015—rising to 686 in this year’s third quarter. New assumed names totaled 343 over the recent quarter—a decrease of 1.4 percent compared to the same period in 2015. There were 45 new filings for Central Minnesota non-profit in the third quarter—five fewer filings than one year ago. Central Minnesota employment was 0.7 percent lower in September 2016 than it was one year earlier. Compared to one year ago, 2,567 fewer residents of Central Minnesota now have jobs. The September regional unemployment rate was 3.4 percent—up from 3.2 percent one year earlier. Initial claims for unemployment insurance were 4.6 percent higher in September than they were in the same month last year. The Central Minnesota labor force contracted by 0.5 percent over the past year and the job vacancy rate remains elevated at 72.21 per 100 unemployed. As noted in last quarter’s Central Minnesota Economic and Business Conditions Report, regional bankruptcies have levelled out. The region’s 1,532 bankruptcies over the past twelve months are only slightly lower than they were in last quarter’s report. Economic performance in the St. Cloud area was mixed, with higher unemployment rates, less help wanted linage, higher initial jobless claims and a decline in the labor force being offset by accelerating wages, a rising work week, higher employment, an increase in new business filings, and a rise in home prices. A recent survey of St. Cloud area business leaders was less optimistic about future business activity than one year earlier. It appears the economic expansion in St. Cloud (and Central Minnesota) has matured, so less rapid growth can be expected in future quarters