70 posts categorized "Economic Development"

The part-time blues: White collar versus blue collar jobs

Part-time work has seen a considerable swing since the recession (see earlier Roundup post). Different types of workers also saw varying fluctuations in part-time work. Take blue collar versus white collar workers, for example.

The Current Population Survey, conducted by the U.S. Census Bureau, categorizes 11 major occupations by the color of their collar: Two are white collar and nine are blue collar (see table, at bottom). As a result, blue collar jobs currently make up a little more than 70 percent of all part-time jobs (see Chart 1).

Part-time B&W collar CH1

Roughly one-quarter of all blue collar jobs are part time, a ratio that changed modestly during the recession, but has been declining (see Chart 2). Levels of “part-time jobs for economic reasons”—a category described by the CPS as “involuntary”—are also much higher as a share of the labor force compared with white collar positions (see Chart 3).

 The share of blue collar workers at part-time jobs involuntarily rose steeply during the recession and remained quite elevated until last year, when levels began to fall quite rapidly and are now near prerecession levels. A similar pattern exists for the share of white collar workers who are part time involuntarily, although this share is still somewhat elevated.

Look for future fedgazette Roundup blog posts on more part-time job trends in Ninth District states, as well as an in-depth look at Ninth District job growth since the recession in the July issue of the fedgazette.

Part-time B&W collar CH2-3
   Part-time B&W collar TABLE

 

Ninth District Beige Book: Signs of moderate economic growth in spring

Since early April, some key sectors in the Ninth District economy have varied, but overall growth has been moderate. Home sales and prices increased at a strong rate, although residential construction remained flat. Energy and mining activity continued to decline, contributing to a slowdown in spending and employment in the energy-producing region of western North Dakota and eastern Montana. While prices were relatively stable and wage increases remained mild, some signs of increased wage pressures appeared.

Residential real estate and consumer spending grew

Residential real estate activity showed strong increases in many parts of the Ninth District during April compared with a year earlier. For example, in western Wisconsin, home sales increased 25 percent and the median sales price rose 12 percent, while in Minnesota, home sales were up 20 percent with the median sales price up 12 percent. Home sales were buoyed in part by a relatively mild spring in many parts of the district. Meanwhile, residential construction was flat overall.

Retail and tourism spending also contributed to positive economic growth. According to a recent survey of district business leaders conducted by the Minneapolis Fed, 40 percent of respondents noted that retail spending increased over the past three months, while 12 percent reported that sales had decreased. An auto dealers association expects Minnesota vehicle sales in 2015 to exceed last year’s levels. Tourism activity was solid in many parts of the district in part due to seasonably warm weather. A travel agency in Minnesota noted that leisure travel bookings for March and April were up over 10 percent.

Meanwhile, manufacturing activity was level overall in April and May. The impact of the recent increase in the exchange value of the dollar likely had an effect on district manufacturers, as 29 percent of manufacturer respondents to the district business-leader survey reported that the dollar’s rise had decreased sales, though most reported that sales had not changed. “Increased value of the dollar has hurt our bottom line because of lower revenue from outside the U.S. on same volume,” commented a respondent. An index of manufacturing activity by Creighton University increased in April from the previous month in Minnesota and South Dakota; the index fell in North Dakota, but was at levels consistent with slight growth in all three states.

Natural resources sectors were slow

Natural resources sectors, including agriculture, energy and mining, had a depressing effect on the district economy. While progress in crop planting was well ahead of its five-year average and drought conditions were relieved by recent rains in several areas, the Minneapolis Fed’s first-quarter (April) survey of agricultural credit conditions showed that 79 percent of respondents said farm incomes fell in the previous three months, with a similar outlook for the second quarter. The avian flu has impacted a number of poultry producers and is expected to cost Minnesota turkey producers more than $300 million.

In the energy-producing area of the district, the drilling rig count dropped to 79 in mid-May, all in North Dakota (no rigs were active in Montana), down from almost 200 in September 2014. The continued decline in drilling activity led to layoffs of oilfield workers and reduced demand for support services. Nevertheless, oil production levels and transportation remained relatively high, albeit down from record levels set in December. The slowdown in oil drilling made its way to Wisconsin and Minnesota, where output at mines producing sand for hydraulic fracturing was expected to decline this year and one facility was idled. However, the overall economic impact of the reduction in oil and gas drilling has remained relatively contained to the energy-producing area.

Some tightening in labor markets and signs of wage pressures

As the district continued to show signs of moderate economic growth, hiring increased on balance and labor markets tightened further. According to a recent ad hoc survey by the Minneapolis Fed, 40 percent of respondents said their ability to retain employees has become harder over the past 12 months, while just 3 percent said it has become easier. “We are seeing a lot of employee turnover, as most see this as the best way to impact salary and opportunity,” noted a respondent to the professional business services survey. A Minnesota manufacturers survey found that hiring plans for the upcoming year are similar to a year ago. However, labor markets softened in the energy-producing area of the district; online job openings were down 23 percent in April compared with a year earlier in the North Dakota oil patch (see Chart 1).

Prices were relatively stable, except for a recent increase in gasoline prices. Wage increases remained mild in April and May, with some instances of increased wage pressures. For example, about a quarter of respondents to the aforementioned ad hoc survey were raising starting pay for most job categories to attract new hires (see Chart 2). Three health care systems in Minnesota have agreed to a minimum wage of $15 per hour under recent contract agreements.

Beige Book June 2015 -- 6-12-15

More recharging personal batteries at national parks

Even in the digital age—or maybe because of it—the great outdoors continues to be a tourism draw, as evidenced by growing visits to the country’s national parks, according to data from the National Park Service (NPS). And those visits are translating to the Ninth District economy.

Attendance has been trending upward at many parks, especially since the recession. Last year, attendance grew 6 percent among the 13 national parks in the Ninth District with annual attendance of at least 100,000, and is up almost 20 percent since 2008 (see Chart 1). In 2014, attendance at these district parks hit 9 million for the first time.

Among these large national parks in the district, two of them—Mount Rushmore in South Dakota and Glacier National in Montana—are responsible for half of all visitors. (The list does not include Yellowstone, portions of which are in Montana, but which lies mostly in Wyoming.) The biggest jump in attendance last year occurred at the Apostle Island National Park. Located in Lake Superior off the northern tip of Wisconsin, it saw attendance double to almost 300,000 in 2014 thanks to an impressive formation of ice caves on the island, coupled with a uniquely long viewing period.

Those visitors are spending money and creating jobs, according to a separate NPS database. Visitor spending hit nearly $1.2 billion last year, supporting more than 20,000 jobs (see Chart 2) in district states.

National parks

Ninth District economy grew in January and February

Oil has dominated the headlines, but the Ninth District economy continued to expand in January and February, with many indicators exhibiting strength and labor markets appearing to have tightened. Several sectors, particularly energy and other commodities, are dealing with low prices. But counteractive, positive conditions for consumers and others helped limit the negative effects. Mild winter weather has had similarly mixed effects.

A wide swath of sectors saw growth. For example, a manufacturing index increased, indicating expansion in the Dakotas and Minnesota. A manufacturer of capital equipment reported that demand in January was stronger than expected. In the services sector, a merger and acquisition services firm noted increased consulting activity and a web design and programming firm noted increased interest from newer firms. In addition, railroads plan to invest more in capital equipment in 2015, and several retailers noted sales increases.

Labor markets continued to tighten, as unemployment rates dropped in many areas of the district. Business owners in South Dakota and western Montana noted difficulty finding workers to fill open positions. A Minnesota staffing firm reported that finding workers was difficult and that competition for those workers increased recently.

As labor markets have tightened, wage pressures appear to have increased in some areas. While data suggest that overall wage increases have been moderate, there were more frequent reports of wage increases above 3 percent during the past couple of months. A recent ad hoc survey by the Minneapolis Fed also found that more employers planned to increase starting pay. Nevertheless, overall wage increases generally remained moderate. Lower energy and other commodities prices affected different regions of the Ninth District.

Lower oil prices affected producers as they cut back on new development in North Dakota and Montana by nearly 30 percent from the beginning of the year, leading to reduced hours and layoffs of oilfield workers (see chart). The number of job postings in the region has also decreased, but several companies in various sectors are still looking for employees. Wage pressures and apartment rental prices have eased somewhat in the energy-producing region.

Beige book blog 3-10-15

Among other commodities, the evidence is mixed. For example, lower metal prices caused a Montana copper-silver mine to shut down. Even though iron ore prices have been dropping, an iron ore analyst expects production to increase slightly in 2015. Low crop prices have hampered farmers, but benefited animal producers due to lower feed costs.

While some sectors have suffered from lower commodity prices, district consumers have benefited. For example, Minnesota gasoline prices in mid-February were over a dollar per gallon lower than a year ago. This may have helped boost consumer spending, as district retailers noted growth in retail sales. For example, a North Dakota mall noted that sales were up in January compared with a year ago, and a bar and restaurant chain in Minnesota reported strong sales during January compared with last year. Recent light truck and car sales were relatively solid in Montana, according to a representative of an auto dealers association.

The increasing value of the dollar has made U.S. products more expensive for foreigners. For example, the stronger U.S. dollar and Canadian exchange rate dampened demand from Canadian tourists and shoppers as border crossings and related sales decreased in district states.

The winter has been relatively warm and dry, which aided commercial construction firms that were able to build more and required less heating. Ranchers benefited from less winter stress on their animals. However, not all benefited from mild weather. Several auto body shops complained they had less demand due to better driving conditions that reduced accidents. Some apparel stores had difficulty selling winter clothing due to relatively mild weather conditions during December and January. In addition, a lack of snow slowed winter tourism activity in several areas.

Ad hoc survey: Ninth District businesses plan to ramp up hiring, increase starting pay

The Ninth District economy is in growth mode and employment is expected to increase, based on a recent poll of 140 business contacts from around the district (see methodology below).

Businesses are expecting to expand, with 46 percent of respondents planning to increase employment at their firms and 58 percent of these firms citing anticipated high sales growth as the most important factor behind increased employment. Only 3 percent plan to decrease employment. In the same survey a year ago, 41 percent planned to increase employment and 9 percent planned to cut jobs (see chart).

Other important factors cited for new hiring were overworked staff, the need for additional skills and improved financial condition of firms. The vast majority of respondents plan to use current employee referrals, word of mouth and advertising to get new employees. Forty-eight percent plan to use a recruiting firm, which is up from 22 percent of respondents in last year’s poll. Twenty-seven percent of respondents also plan to raise starting pay compared with only 8 percent last year.

Feb ad hoc survey Ch1+meth -- 2-13-15

Methodology: On Dec. 1, 2014, the Minneapolis Fed emailed a web-based survey to about 600 Beige Book contacts from around the Ninth District. By Feb. 12, 140 contacts had filled out the survey. The respondents come from a variety of industries (see table).

Beige Book recap: Modest growth in Ninth District

Over the past two months, the Ninth District economy has seen modest growth, according to the latest Beige Book information released by the Federal Reserve Bank of Minneapolis. Increased activity was noted in consumer spending, professional services, manufacturing and non-energy mining. Activity was level in tourism and mixed in commercial construction, commercial real estate and agriculture. Energy, residential real estate and residential construction were down. Labor markets continued to tighten since the previous report. While overall wage increases remained modest, there were examples of steeper increases in some regions and industries.

Consumer spending and tourism: Consumer spending increased moderately. Mall and retail representatives across district states reported solid traffic and sales. Overall tourism was about level with a year ago, according to a variety of sources. Construction and real estate: Construction activity was mixed in the district’s larger cities. In Sioux Falls, S.D., the value of November commercial permits increased from a year ago, but fell in Billings, Mont.

Residential construction: Activity was mostly lower. In the Minneapolis-St. Paul area, the value of December residential permits decreased 9 percent from a year earlier and also dropped in the Bismarck, N.D. area (November data). Residential activity was stronger in Billings and Sioux Falls, however. Home sales were generally lower from a year earlier (in November). In the Sioux Falls area, home sales were down 12 percent, inventory increased 1 percent and the median sales price increased 6 percent relative to a year earlier. Sales were also down in northwestern Wisconsin, and the median sales price was 6 percent lower. Minnesota home sales were down 13 percent, inventories of homes for sale increased 5 percent and the median sales price rose 3 percent. Home sales in the Bismarck area were about level with last year.

Manufacturing: Activity increased slightly. A manufacturing index increased in December from the previous month in Minnesota and South Dakota, but fell slightly in North Dakota. However, the index pointed to continued expansion in all three states. Through October, manufactured exports in district states were up 1 percent compared with the same period a year earlier.

Energy and mining: The energy sector slowed slightly in response to lower output prices. Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota. Mining activity increased slightly. District iron ore mines were operating at or near capacity, with November production slightly higher than a year earlier.

Agriculture: Conditions remained mixed, with livestock and dairy producers faring better than crop farmers. A Minneapolis Fed third-quarter survey found that a majority of farm incomes had fallen from a year earlier and that capital spending also decreased. The fourth quarter outlook was also weaker, according to the survey. Prices received by farmers in December decreased from a year earlier for corn, soybeans, wheat, hay and milk; prices increased for cattle, hogs, eggs and poultry.

Employment and wages: Labor markets continued to tighten since the previous report. Overall wage increases remained modest, but there were examples of steeper increases in some regions and industries. Some construction firms in the Minneapolis-St. Paul area noted that labor costs have increased recently. In addition, some managers at Minneapolis-St. Paul area restaurants indicated that they were increasing wages to attract employees.

See the full Beige Book report for more details on the national and Ninth District performance.

October Mid-America survey shows softness in Dakotas; Minnesota on top

Update from last week’s blog.

Results from the October Mid-America Business Conditions Index, released this week, show weakening conditions in the Dakotas and Minnesota. The index surveys supply managers monthly in a nine-state region, and an index greater than 50 indicates expected expansion over the next three to six months.

For the first time in recent memory, sentiment in North Dakota is hovering near contraction, with the state’s overall index declining to 54.8 and employment dropping to 51.2; both of South Dakota’s scores have continued a general descent of late, declining to 51.8. While Minnesota’s scores also dropped, it remains a bright spot, with its overall index at a healthy 63.7, with employment at 56.7.

Mid-America UPDATE -- 11-4-14

U.P. electricity prices tops in district

Households and firms in the Upper Peninsula of Michigan have long complained about expensive power. Civic and business leaders say high electricity rates squeeze family budgets and hamper efforts to foster industrial development in a region plagued by high unemployment.

Angst over the price of U.P. electricity has come to a head this fall. A regional power grid authority has ordered Wisconsin-based We Energies to continue operating an aging coal-fired power plant near Marquette, with costs passed along to U.P. ratepayers. If federal energy regulators approve, U.P. utility customers could see average rate increases of $100 annually to fund operating subsidies for the Presque Isles plant and two other coal-fired power plants in the U.P.

The Michigan Public Service Commission and big U.P. power consumers such as Cliffs Natural Resources—owners of the Empire and Tilden iron mines—have objected to the proposed rate hikes, saying they would further burden utility customers already paying dearly for electricity.

Federal price data show that U.P. residents pay higher electricity rates than those in other parts of the Ninth District and the nation as a whole (see Chart 1). Electricity costs about 20 percent more in the U.P. than it does in Minnesota and about 35 percent more than in North Dakota. But Yoopers pay less than Michiganders overall, and U.P. power is a bargain compared with utility rates in some parts of the country, such as New England.

However, the U.P. average rate obscures wide disparities across the peninsula; residents of some U.P. communities pay significantly more than others to keep the lights on, the result of differing customer densities and, in some cases, reliance on imported power rather than local generation sources. State PSC figures for 2013 show that power producers such as Upper Peninsular Power Co. and the Alger Delta Cooperative Electric Association, which primarily serve customers in the western and central U.P., charge much higher rates than other utilities (see Chart 2).

UP power -- 11-3-14

Surveys: District manufacturing, state economies seeing fluctuation

Amid the news of falling oil prices and a slowing global economy in contrast to a comparatively strong U.S. economy, two monthly surveys by Creighton University offer a somewhat muddled picture of economic growth in three Ninth District states.

The Rural Mainstreet Index asks community bank presidents and CEOs in rural areas of a 10-state region (including Minnesota and the Dakotas) about current economic conditions and six-month outlook in roughly 200 small communities.

Since mid-2013, the overall index has stayed mostly in expansion territory (an index score of 50 or more). But the index has dipped into contraction on a couple of occasions—particularly for South Dakota—and the general slope of sentiment is slightly downward (see Chart 1).

The good news: Respondents have been upbeat on new hires, with particularly strong scores in Minnesota and North Dakota. The less good news: Sentiment toward farmland prices has tumbled, especially in Minnesota and South Dakota, most likely stemming from low crop prices over this period. Aside from a single-month blip, North Dakota’s farmland index has stay strongly in expansion territory, most likely the result of the state’s very strong economy, with farmland prices possibly being buoyed by demand from nonfarmers.

Mid-America Ch1 -- 10-31-14

A second survey by Creighton, the Mid-America Business Conditions Index, compiles monthly data from manufacturing, purchasing and supply executives in the same 10-state region (and also including Minnesota and the Dakotas). Overall, respondents in these Ninth District states have reported solid expansion, with the overall index slightly upward over the past year (see Chart 2). After a big uptick in employment sentiment, index scores dropped over the summer, but respondents in Minnesota and North Dakota continued to see healthy expansion in the latest surveys. In both manufacturing indexes (overall and employment), South Dakota has seen its scores dip of late, and they appear to be trending downward.

Mid-America Ch2 -- 10-31-14

A summer of steady growth in the Ninth District

The Ninth District economy continued to show signs of steady growth through the summer months, characterized by job growth, decreases in unemployment rates and gains in home building.

As of August, nonfarm employment in district states was up 1.8 percent relative to a year ago, posting a net increase of about 122,000 jobs. North Dakota reported the strongest employment growth among district states, accounting for about one in every six jobs added in the Ninth District over the past 12 months despite the state’s workforce comprising only 7 percent of the district total. Employment growth in other district states was largely in line with the national trend (up 1.8 percent), except in South Dakota, where nonfarm employment growth was 0.7 percent.

The district unemployment rate dropped to 4.7 percent over the same period, down 0.8 percentage points from a year ago. The spread in unemployment rates among district states has narrowed over the past 12 months. Regions with relatively high unemployment rates, such as the Upper Peninsula of Michigan, Wisconsin and Montana, posted larger year-over-year declines than Minnesota and the Dakotas, where unemployment rates started out much lower last year.

Manufacturing wage growth in the district slowed to 1.4 percent during the three-month period ending in August, compared with a growth rate of 2.5 percent during the same period a year earlier. With the exception of North Dakota and Wisconsin, growth in manufacturing wages in district states was below the national average of 1.6 percent. Montana’s manufacturing workers reported the lowest year-over-year growth rate in hourly earnings among district states, which barely reversed the flat or declining trend in manufacturing wages in the state for much of 2013 and early 2014.

During second quarter 2014, personal income growth (adjusted for inflation) across district states was positive, posting a 2.2 percent overall increase relative to a year ago for the district. Except for North Dakota, all district states posted lower personal income growth rates relative to the national average of 2.4 percent, while South Dakota’s state ranking in growth was near the bottom.

New housing authorizations for the three-month period ending in August were up 8.2 percent in district states; however, rates varied widely among district states. Montana and South Dakota posted year-over-year declines of over 20 percent in new housing authorizations, while North Dakota showed a 42 percent increase over the same period. Housing authorizations in Minnesota and Wisconsin were up 5 percent and 10 percent, respectively, closer to the national average of 7.7 percent.

Home prices continued to show increases in several district cities. During the second quarter of 2014, home prices were 7.4 percent higher than a year ago in Bismarck, N.D., 6.7 percent higher in Minneapolis-St. Paul, 3.2 percent higher in Fargo, N.D., and 2.6 percent higher in Sioux Falls, S.D. Nationally, home prices increased by 4.4 percent during the same period.

For current and historical data on the economic indicators referenced here, see the “Monthly Summary” spreadsheet, along with other Ninth District data that are updated regularly.