ADVERTISEMENT

ADVERTISEMENT

State report: Northland economy improving

Most economic indicators for Northeastern Minnesota improved in the second quarter of 2015, according to a report by St. Cloud State University released Tuesday by the Minnesota Secretary of State's Office.

Most economic indicators for Northeastern Minnesota improved in the second quarter of 2015, according to a report by St. Cloud State University released Tuesday by the Minnesota Secretary of State's Office.

The report predicts that business conditions will continue to improve over the next several months, based on improving numbers for four of five "leading economic indicators" from April through June.

A spike in new business formations this spring leads the economic indicators compared to winter months, but the region also saw an uptick in unemployment due to layoffs in the mining industry which continue to weigh on the region's economy.

"After being in negative territory for the previous two quarters, this quarter's positive LEI reading is a welcome sign of future improvement in the northeast Minnesota economy," the report notes. "A recent rise in initial jobless claims in the region was the only drag on the LEI in the second quarter."

Statewide, the report shows growth in payrolls and a decline in the unemployment rate from one year ago. After showing signs of weakness in the first quarter of the year, five of six regional planning areas are expected to see positive economic growth in the coming months.

ADVERTISEMENT

Only Southwestern Minnesota, hit by reduced prices for agricultural crops, is not expected to see growth in coming months.

According to the report:

• The Duluth-Superior Metropolitan Statistical Area, Northeastern Minnesota's largest market, experienced a 1.5 percent rise in overall employment over the year ending June 2015, as the key education/health sector added jobs.

• Northeastern Minnesota employment was 0.4 percent higher than year earlier levels in June. The regional unemployment rate increased to 5.6 percent, but the Northeastern Minnesota labor force grew by 0.6 percent. Despite this, the regional labor force is still 2,138 lower than in June 2010. June 2015 initial claims for unemployment insurance were 263 higher than the year earlier, a 21.4 percent increase.

• There were 559 new business filings in Northeastern Minnesota in the second quarter of 2015 - representing a 2 percent improvement from one year ago. Fifty-two new regional business incorporations were filed in the second quarter, representing no change from 2014. New limited liability company (LLC) filings in Northeastern Minnesota rose by 14.9 percent to 293.

• Average weekly wages in the Northeastern Minnesota planning area increased by 3.3 percent to $803 over the year ending in the fourth quarter of 2014 (the most recently available data). Northeastern Minnesota's average wages rank third out of the six Minnesota regions. Only Twin Cities and Southeast planning areas have higher wages.

• With 534 bankruptcies during the past 12 months, the level of bankruptcies in Northeastern Minnesota has now returned to a level last seen prior to the Great Recession. Bankruptcies peaked at about 1,100 in 2010.

Tony Barrett, professor of economics at the College of St. Scholastica in Duluth, said he focuses less on quarterly differences in economic indicator data like Tuesday's report and more on long-term trends. So far, he said, the long-term trend for the region remains positive, if at a sometimes maddeningly slow pace.

ADVERTISEMENT

"The U.S. economy and the regional economy have been expanding since June of 2009. But at no time have we expanded quickly,'' Barrett said, calling it a "milquetoast'' recovery since the Great Recession.

"The outlook is good. The indicators are good. Optimism is up ... you can see that from the new business starts,'' Barrett said. "But there are some things, like the decline in the labor force, that still stick out as a problem. If the economy is going to grow, we need more people in the workforce, not fewer."

Northeastern Minnesota's 5.6 percent unemployment rate is by far the highest in the state, compared to 3.7 percent in the Twin Cities, 4.1 percent in central Minnesota, 4.4 percent in the northwest, 3.6 percent in the southeast and 4.1 percent in the southwest.

The reports were developed by the St. Cloud State University School of Public Affairs Research Institute, in partnership with the Office of the Minnesota Secretary of State. The Secretary of State's Office reviews and approves all Minnesota business filings, and commissioned the reports to provide a perspective on business conditions and deliver a tool for entrepreneurs to better understand their region.

John Myers reports on the outdoors, natural resources and the environment for the Duluth News Tribune. You can reach him at jmyers@duluthnews.com.
What To Read Next
Bankruptcy information gathered from cases filed in U.S. Bankruptcy Court in Duluth.
Recently sold properties from St. Louis County.
Bankruptcy information gathered from cases filed in U.S. Bankruptcy Court in Duluth.
Recently sold properties from St. Louis County.