Minnesota Manufacturing at a Six-Year Low (and Other Troubling Numbers)

Date: January 19, 2016

Recession indicators are fading, but Minnesota manufacturers still have reason to worry about 2016.

Despite unemployment lows for Minnesota, the state’s manufacturing is off to an alarmingly sluggish start.


To start with some perspective, the Mid-America Business Conditions Index, which is produced by Creighton University’s Economic Forecasting Group, indicates economic contraction whenever it falls below a score of 50.


Minnesota’s December score? 39.4.


That number is among the lowest the state’s index has plummeted since 2009, according to the StarTribune. The supply managers surveyed by the Economic Forecasting Group pointed toward declines in sales, new orders, employment, inventories and delivery lead times as indicators of their slowdowns.


The North Star State isn’t alone in this slump. The entire Midwest experienced economic turmoil last month, laying off workers and experiencing a decline in export orders. Compared with the “below growth neutral” national index of 48.2, according to the Forecasting Group, the nine-state central region landed at 39.6—only 0.2 higher than Minnesota.


Food-processing companies took the most severe blow; among the more successful groups, medical equipment manufacturing led the pack.


Last month’s index came with a 2016 wish list for Minnesota, too. The index’s economists are hoping for “continued low long-term interest rates incentivizing building construction” next year, which would help boost Minnesota’s index. The greatest 2016 economic risk to Minnesota, on the other hand, is a “stronger U.S. dollar driven by aggressive Federal Reserve rate hikes.” This predicament and weaknesses in other countries were responsible for slowing last month’s manufacturing, the StarTribune reported.


That’s not all that’s troubling Minnesota right now. Some geographical areas are doing worse than others, according to a St. Cloud State University report that broke down the state’s economy by region last year. Here’s what the study found:


  • Twin Cities: Unemployment clocked in at 0.4 percent below the statewide 3.5 percent.
  • Central: New business filings went down 3 percent.
  • Northeast: New business filings fell 1.1 percent.
  • Northwest: New business filings dropped 3.6 percent.
  • Southeast: Unemployment ranked 0.7 percent below the statewide average.
  • Southwest: New business filings sunk 8.8 percent.



On a brighter note, Prairie Business reported that 58 percent of Minnesotans are optimistic about the economy. A recent economic forecast from the state government predicted economic expansion will “continue over the next several years, but at a generally slower pace than the national average. Both employment and wage income growth are expected to remain modest in 2016 and 2017, with the average nominal wage slowly accelerating.”

Related Content: Small Business News | Economy | Minnesota

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