Southeast Minnesota Economic and Business Conditions Report - Second Quarter 2017

Steady economic growth in Southeast Minnesota is expected to continue over the next several months according to the most recent prediction of the Southeast Minnesota Index of Leading Economic Indicators (LEI). After a quarter in which the LEI experienced a revised 11.83 point increase, the Southeast Minnesota leading index paused, falling 1.01 points in the second quarter of 2017. Four components of the LEI had negative readings in the second quarter. A rise in initial claims for unemployment benefits, a smaller number of residential building permits in Rochester, decreased new filings of incorporation and LLC in the Southeast Minnesota planning area, and softer consumer sentiment all weighed on the LEI. Improvement in the Minnesota Business Conditions Index (which serves as a general measure of state business conditions) had a favorable impact on the leading index.There were 886 new business filings with the Office of the Minnesota Secretary of State in Southeast Minnesota in the second quarter of 2017 — representing a 2.7 percent decrease from one year ago. There were 47 new regional business incorporations in the second quarter, a 35.6 percent reduction from prior year levels. At a level of 555, second quarter new limited liability company (LLC) filings in Southeast Minnesota were 3.5 percent higher than the second quarter of 2016. With 245 filings, new assumed name activity was 4.3 percent lower than the same quarter last year. There were 7 fewer new filings for Southeast Minnesota non-profits over the last three months compared to one year earlier.Sixty-three percent of new business filers in the Southeast Minnesota planning area completed the voluntary Minnesota Business Snapshot (MBS) survey in this year’s second quarter. Results of this voluntary survey indicate that more than 5.5 percent of new filers come from communities of color and a similar percentage are veterans. One percent of new filers come from the disability community and 5 percent of new filings are made by the immigrant community. Thirty-seven percent of new business filings in Southeast Minnesota in this year’s second quarter were initiated by women. MBS results also show that most new business filers in Southeast Minnesota have between 0 and $10,000 in annual gross revenues (although 56 new filers have revenues in excess of $50,000). The most popular industries for new businesses in Southeast Minnesota are construction, retail trade, and other services. Employment levels at most new firms are between 0 and 5 workers, and 46 percent of those starting a new business consider this a part-time activity.Employment of Southeast Minnesota residents rose by 1 percent over the year ending June 2017. The regional unemployment rate was 3.4 percent in June, lower than the 3.6 percent level recorded one year earlier. Initial claims for unemployment insurance in June 2017 declined by 13.8 percent from one year earlier and the Southeast Minnesota labor force increased by 0.8 percent. Average weekly wages flattened out in Southeast Minnesota and the planning area’s annual bankruptcies increased slightly.