Minneapolis Real Estate | U.S. Federal Reserve Beige Book ...
The following is the text of theFederal Reserve Board?s Ninth District? Minneapolis .
The Ninth District economy has grown slightly since the lastreport. Increased activity was noted in consumer spending ,tourism, residential and commercial construction, residentialreal estate, manufacturing, energy and mining. Crop reports weremostly down from last year, but several District agriculturalprices have risen recently. Activity in commercial real estateand professional services was flat overall. Reports from labormarkets include a mix of layoffs and new hiring, while wageincreases remain moderate. Price increases were generally modest.
Consumer spending increased moderately. A major Minneapolis-based retailer reported that same-store sales in July increasedover 4 percent compared with a year earlier. Two Minnesota restaurant and bar chains reported that recent sales were upmodestly from last year. A North Dakota mall manager reportedthat sales and traffic were steadily up during July and Augustcompared with a year ago. After a relatively soft July, salesand traffic picked up by mid-August at a South Dakota mall. Bankdirectors noted that luxury goods showed signs of strength, suchas sales of jewelry and high-end vehicles.
Minnesota auto dealers were profitable, with recent sales upfrom last year but still down substantially from 2006, accordingto an auto dealers association representative. Two auto dealersin Montana reported recent gains in sales from a year ago, but athird dealer described sales as dismal.
Tourism activity was solid in July and August. While earlysummer rains and high river levels hampered fishing and otheroutdoor activities in Montana , overall tourism picked up in July.Tourism businesses in northwestern Wisconsin were busy duringJuly and August, according to an official. Activity was up about5 percent compared with last year in the Upper Peninsula of Michigan ; hotels were able to raise prices without losing volume.
Commercial construction activity has increased slightly sincethe last report. Respondents to a mid-August Minneapolis Fed adhoc survey reported an increase in revenues, primarily due to anumber of small commercial retrofitting projects in theMinneapolis-St. Paul area. Rebuilding in flood-damaged areas wasalso mentioned. However, the value of commercial buildingpermits in the Sioux Falls, S.D., area was down slightly in Julyfrom July 2010. Residential construction increased from lastyear. The value of residential building permits in Julyincreased significantly from the same period a year earlier inboth the Sioux Falls and Minneapolis-St. Paul areas.
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Commercial real estate markets were flat. Commercial real estaterespondents to the Minneapolis Fed?s ad hoc survey noted flatrevenues and profits over the past three months. Comments fromMinneapolis-St. Paul area contacts include the following: ?Thereis very little activity in the leasing, sales and landdevelopment arena.? ?The market is full of fence sitters becauseof general uncertainty about the economy.? Residential realestate markets grew. Home sales in July were up significantlyfrom the same period a year ago in the Minneapolis-St. Paul andFargo, N.D., markets. However, July pending sales of homes inthe Sioux Falls area decreased from July 2010.
On balance, professional business services firms reported flatactivity over the past three months. A third of services firmsthat responded to the ad hoc survey saw increased sales, while athird saw decreased sales. Respondents noted that profits werealso flat, but they expect increased activity over the nextthree months. An information technology company noted that Julysales were down due to reduced demand from the government andfinancial services areas.
Manufacturing activity increased slightly. A July survey ofpurchasing managers by Creighton University (Omaha, Neb.) showedthat manufacturing activity increased in Minnesota and SouthDakota , but declined slightly in North Dakota. A metalfabricator announced plans to expand a facility in northwesternMontana. Nearly three-quarters of manufacturing respondents tothe Minneapolis Fed?s ad hoc survey indicated that their salesincreased in the past three months, and 60 percent expect themto increase in the next three months.
Activity in the energy and mining sectors continued at stronglevels since the last report. Late-August oil explorationactivity increased from mid-July. Iron ore shipments fromDistrict mines increased 18 percent in July from a year earlier,according to a Great Lakes shipping organization. Activity atMontana mines remains strong, driven by high metals prices,according to contacts.
Ninth District agricultural production is expected to decreasefrom last year, while prices remain strong. Montana and NorthDakota durum wheat production estimates for 2011 were down acombined 57 percent from 2010, according to the U.S. Departmentof Agriculture . Spring wheat and soybean production estimatesfor District states were down 18 percent and 10 percent,respectively. In contrast, District corn production estimatesincreased about 5 percent over last year. Prices for manyDistrict agricultural commodities increased since the lastreport, including corn, soybeans, wheat, dairy, cattle and hogs;poultry prices decreased recently.
Reports from labor markets include a mix of layoffs and newhiring. During a 20-day Minnesota government shutdown in July,22,000 government employees were out of work. By delaying statefunding and inspections, the shutdown also idled manyconstruction projects across Minnesota. A bank recentlyannounced plans to cut nearly 150 employees at its brokerageunit in Minneapolis. However, during July, Minnesota gained8,200 private sector jobs. Minnesota auto dealers have startedto hire more sales staff. About 11,000 new jobs related to oildrilling are expected in North Dakota, according to anannouncement by a firm with operations there. According to thead hoc survey, 19 percent of respondents expect to increaseemployment over the next three months, while 10 percent expectto decrease employment. A new fabrication plant in Montana willlead to 100 more jobs, and a sporting goods manufacturer inMinnesota announced plans to add 100 jobs over the next twoyears.
Wage increases remained moderate, although some contentiouscontract negotiations were reported. For example, a sugar beetrefining company locked out 1,300 workers beginning Aug. 1.
Overall price increases were modest. A July Augustana Collegesurvey of Sioux Falls businesses indicated little change inprices received for their products and services. Except for gold,a number of metal prices have decreased since the last report,although they remain well above year-earlier levels. Diesel fueland gasoline prices were still nearly a dollar per gallon higherthan a year ago, but their rate of increase has slowed. Inputcosts increased over the past three months, according to 46percent of the ad hoc survey respondents; only 9 percentindicated decreases.
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