3 posts from May 2013

Higher sales activity, need for specialized staff, have Ninth District businesses looking to hire

The Ninth District economy continues its expansion, according to a May survey of 232 business contacts from around the district (see methodology). At about the same rate as a similar January poll, 41 percent plan to increase employment at their firms and only 8 percent plan to decrease employment.

Important factors cited for new hiring were increased sales, overworked staff, finding workers with new skills and less economic uncertainty. Businesses plan to obtain the workers through word of mouth and advertising. Seventeen percent plan to raise starting pay, compared with only 9 percent of respondents in the January poll.

For those respondents not planning to hire additional people this year, most said expected sales were low, and many reported that they wanted to keep costs down. A quarter reported that uncertainty about health insurance costs was the most important reason for not hiring.

Methodology: On May 13, the Minneapolis Fed invited, via email, about 1,000 Beige Book contacts from around the Ninth District to answer special questions in a web-based survey. By May 14, 232 contacts had filled out the survey. The respondents come from a variety of industries.

District tourism hopes upward trend continues

With summer travel around the corner, many Ninth District businesses hope they can improve on 2012’s good-to-great tourism year, according to data from state tourism offices and university research centers in district states.

District states that track visitors or lodging stays reported 2012 increases across the board (see chart, at bottom). Gains were larger in Montana and especially North Dakota, where total visitors increased by 7 percent. South Dakota did not publish annual figures for visitors or spending change over the previous year, but reported that state park visitation last summer was up by 8 percent. North Dakota saw the same trend, with national park visitation there up 13 percent last year. Canadian border crossings were also up 8 percent.

States that track visitor spending saw it increase faster than visitor numbers. Wisconsin tourism spending grew by almost 5 percent last year, while Montana tourists were feeling particularly flush, spending 15 percent more in 2012 than the previous year. While Minnesota’s total lodging demand increased by 1.4 percent, total lodging revenue rose by 3.7 percent.

Higher visitor spending has been a consistent trend for several years, as tourists have found their wallets again after the recession. In Wisconsin, visitor spending has grown by 25 percent since 2009, to $10.4 billion. Montana has seen even stronger spending growth (40 percent) over the same period. However, the state experienced a steep downturn in visitor spending from 2007 to 2009, and last year’s $3.2 billion in spending finally reached above the state’s previous peak ($3.1 billion) in 2007.

Some positive early signs for the 2013 season are already evident. Early projections in Montana for the 2013 season were pegged at 2 percent growth of nonresident visits, and a 4 percent increase in spending. In Minnesota, lodging demand grew by 4.3 percent in the first quarter of this year compared with the same period in 2012.

Tourism 2012 -- 5-10-13

Manufacturing in Ninth District more optimistic

After a brief lull in the second half of last year, manufacturers in the Ninth District appear to be getting a second wind of optimism, especially compared with their national peers.

Survey results from the April Mid-America Business Conditions Index show that manufacturers in Minnesota and North Dakota are growing in their overall optimism, while U.S. manufacturers have declined for three straight months and are close to negative in their sentiment (an index score above 50 indicates expansion, while an index below 50 indicates contraction). Minnesota’s index for new orders has also rebounded strongly for the past two months. While South Dakota declined in overall sentiment last month, it remains several points above the United States.

Respondents from these three district states (Wisconsin and Montana are not part of this survey) were upbeat on the employment front as well. After a slowdown in hiring sentiment in North Dakota through the early part of this year, April figures almost jumped off the chart. Hiring sentiment has been more moderate in Minnesota and South Dakota, but both are on a steady upswing, especially compared with the nation, which has been trending down in recent months.

Scores are based on surveys of purchasing managers in these states and are conducted monthly by Creighton University. The U.S. results are also mirrored in a similar but different index of purchasing managers by Markit, a global financial information services company. Markit's survey does not have a district component, but its April survey saw the U.S. index drop to 52.1, the weakest manufacturing expansion in six months.

Mid-America -- April survey charts 5-2-13