CURRENT BUSINESS CONDITIONS FUTURE BUSINESS CONDITIONS

ST. CLOUD AREA ST. CLOUD AREA

BUSINESS May 2024 vs. Three Months Ago 6 Months from Now vs May 2024
February BUSINESS February
OUTLOOK SURVEY 2024 May 2023 OUTLOOK SURVEY 2024 May 2023
Summary May 2024 Decrease No Change Increase Diffusion Diffusion Diffusion Summary May 2024 Decrease No Change Increase Diffusion Diffusion Diffusion
(%) (%) (%) Index3 Index3 Index3 (%) (%) (%) Index3 Index3 Index3
What is your evaluation of: What is your evaluation of:

Level of business activity for 23.5 35.3 41.2 17.7 20 -14.7 Level of business activity for 17.6 41.2 41.2 23.5 33.3 15.6
your company your company

Number of employees on Number of employees on

your company's payroll 31.2 56.2 12.5 -18.7 24 -2.9 your company's payroll 12.5 62.5 25 12.5 33.3 18.8

Length of the workweek for Length of the workweek for 0 82.4 17.6 17.6 8.3 6.3
your employees 6.2 81.2 12.5 6.3 4 8.8 your employees

Capital expenditures (equip., Capital expenditures (equip.,

machinery, structures, etc.) by 6.2 56.2
Type something 37.5 31.3 20 35.3 machinery, structures, etc.) by 5.9 52.9
Type something 41.2 35.3 41.6 43.8
your company your company

Employee compensation Employee compensation

(wages and benefits) by your 6.2 56.2 37.5 31.3 44 50 (wages and benefits) by your 0 56.3 43.8 43.8 66.7 56.3
company company
Prices received for your Prices received for your
companyʼs products 0 58.8 35.3 35.3 29 23.5 companyʼs products 0 58.8 41.2
Type something 41.2 29.2 25

National business activity 12.5 62.5 25 12.5 19 -24.2 National business activity 0 68.8 31.3 31.3 25 -6.5

Your companyʼs difficulty 12.5 Type something

68.7 18.7 6.2 12 0 Your companyʼs difficulty 12.5 Type something
50 37.5 25 29.2 6.7
attracting qualified workers attracting qualified workers

*Source: SCSU HBS College of Business; Department of Economics *Source: SCSU HBS College of Business; Department of Economics
Notes: (1) reported numbers are percentages of businesses surveyed. (2) rows may not sum to 100 because of “not applicable” Notes: (1) reported numbers are percentages of businesses surveyed. (2) rows may not sum to 100 because of “not applicable”
and omitted responses. (3) diffusion indexes represent the percentage of respondents indicating an increase minus the and omitted responses. (3) diffusion indexes represent the percentage of respondents indicating an increase minus the
percentage indicating a decrease. A positive diffusion index is generally consistent with economic expansion.

SURVEY:
percentage indicating a decrease. A positive diffusion index is generally consistent with economic expansion.

Businesses shrug off a challenging spring,

expect better conditions through fall
BY KING BANAIAN AND yet still retain the customer.” ► Prices received were
MANA KOMAI MOLLE
St. Cloud State University
In contrast to the last three
months, two business leaders
expected to rise by 41.2% of
respondents this quarter versus
KEY RESULTS
expected an increase in the 29.2% in the previous quarter
The St. Cloud Area Quarterly level of their own company’s and 34.4% last year.
Business Survey showed slightly activity over the next six ► Slightly fewer respondents
45
weaker business activity in months for each one that expected to raise compensation
the period of February to April thought it would decrease. The in the next six months. 41.2
Diffusion Index (% increase - % decrease)

40
2024, with 31% of respondents diffusion index (the difference ► With a diffusion index
reporting a decrease in the between the share of those of 25, the expected future 35
number of employees on their reporting an increase and those difficulty of attracting qualified 33.3
payrolls. reporting a decrease) fell slightly workers has eased slightly in the 30 29.2 29.2
► There was a lessening of from February but is stronger last six months, but is still tight
wage pressure, with only 3 out than in the May 2023 survey. relative to year-ago levels. 25 25 25
23.5
of every 8 (37.5%) firms now The survey results combined Business leaders continue
reporting increasing wages in with quantitative indicators to to comment on the tight labor 20
the quarter. A year ago at this show a slight increase in area market. “We have been in a 15.6
15
time, more than half of all firms payroll employment over the growth mode for years but
reported rising wages. next four to six months. The finding the qualified talent has 10
► Thirty-five percent of St. Cloud Index of Leading been the challenge,” wrote one
6.7
firms raised prices in the most Economic Indicators rose to respondent. “We’ve been hiring 5
recent quarter. 109.6 from 109.0 last quarter. inexperienced and growing their
► Higher prices have This projects private sector talent but that is a very slow 0
met some push back from employment to rise by 0.5% process.” Future Business Activity Future Prices Received Future Difficulty
consumers, reported one over by fall over spring 2024. ► “St. Cloud needs to attract Attracting Qualified
respondent. “Our rates have Pricing pressures and wage businesses that are paying good Workers
often stayed the same or increases also characterized wages to get new skilled people
lessened to meet market business leaders’ outlook over to come to this town,” wrote
economic conditions this year the next six months. another. May 2024 Feb. 2024 May 2023

We asked:
BY KING BANAIAN
AND MANA KOMAI MOLLE Expected inflation comes down
Can current interest
rates curb inflation?
How would the announced closure
St. Cloud State University
slowly in St. Cloud of FDC affect your business?
Higher interest rates have
not generated the desired 80 100
cooling effect on the economy
as finances are largely 70
72% 72% 90
88%
unaffected by the Federal
80
Reserve’s monetary policies. 60
On June 12, the Fed chose 70
to maintain interest rates at
50
their highest level this century 60
and “does not expect it will
40
be appropriate to reduce the 50
target range (for interest rates)
30 40
until it has gained greater
confidence that inflation is 22% 30
moving sustainably toward 2 20
17%
percent.” But higher interest 20
11%
rates have not had the effect 10
6%
on the economy policymakers 10
6% 6%
expected. For instance, 0
0 0%
personal consumption Less than 2% Between 2% and 3% Above 3%
adjusted for inflation still rose
a healthy 2.6% in the last year End 2024 End 2025 Very negatively Negatively I expect no signifcant effect Positively
through April 2024, and the
national unemployment rate “The Federal Reserve usually But the broad view of losing its sole customer, governments but also for local
for May just touched 4%. targets an inflation rate of from this response was Publisher’s Clearing House businesses and community
The Fed’s Statement of no more than 2%. Over the characterized best by (PCH). The closure will result in members.
Economic Projections issued last 12 months, the Fed’s another respondent: “I think the layoff of 350 employees. We asked: “How would the
last week include only one preferred measure of inflation it is moving in the right The multifaceted effects announced closure of FDC
reduction in its policy rate by has been 2.8%. In the last 10 direction but very slowly.” At of business closures include would affect your business?”
the end of the year. Higher years before the pandemic, its meeting on June 12, the immediate unemployment Most saw no real
interest rates should cause the inflation rate was 1.6%. Fed’s median forecast for its and financial hardship, connection from FDC’s closure
consumption and business What is your estimation of the target inflation rate was 2.8% reduced spending in the local to their own firms. As we saw
sales to soften as more inflation rate by the end of for the end of 2024 and 2.3% economy, reduced income when Electrolux closed in
Americans eventually decide 2024 (2025)?” for the end of 2025. Both for related businesses, 2019, there is the potential
to purchase homes, and more Having told respondents these numbers were higher economic instability, loss of impact of employees shifting
businesses borrow at higher the current rate of 2.8%, than the expectations of Fed consumer confidence and to other firms and lessening
rates. subsequently revised to 2.7%, participants in March. the cohesion of the social the difficulty finding qualified
We asked our survey makes a response of “above fabric of the local community, workers. “Displaced workers
respondents about their 3%” a significant finding. This THE LOCAL ECONOMIC decline in tax revenues and will get other jobs if applicable.
expectations for inflation by may be a statement about IMPACT OF FDC CLOSURE subsequent public spending, Employers can be more picky
the end of 2024 and 2025, broader government policies: St. Cloud’s Fulfillment etc. Addressing the immediate about candidates and will
after providing them with the One respondent said: “Flood of Distribution Center (FDC) has and future challenges of continue to do so with more
current rate. cash by the government is not announced probable closure local business closures is employees available after FDC”,
The survey question was: going to stop.” by Oct. 31, 2024, as a result not only important for local one respondent suggests.
 Leading economic indicators predict rise of 0.6%
in private sector employment next 4-6 months

2000
Every three months, two St. Cloud State
University economists analyze the latest
business and worker data, as well as the results 1800
from a survey of local business leaders. The
result is the St. Cloud Area Quarterly Business 111
Report. It has been published four times a year 1600 -275
124
since 1999. For the first year, St. Cloud LIVE is
the publishing partner for this content. 1400

MEET THE AUTHORS: 1200 569

1000
-985
KING BANAIAN 800
College of Education
and Learning Design
600
320-308-4797
965
400

200
MANA KOMAI MOLLE
St. Cloud State University
Department of Economics 0
320-308-4781
s

13

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King Banaian specializes in analyzing data and
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writing about it in the second portion of this report.

co
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in
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tu

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Mana Komai Molle collects and analyzes

/b
Ne

of
responses to the St. Cloud Area Business Outlook

Pr
Survey, covered in an early portion of the report.
Only Molle has access to the confidential list of

Leading indicators positive in

surveyed businesses. Questions about the survey
can be directed to her. Special questions asked in

EARLY MONTHS
the survey may at times deal with public policy but
do not reflect a political agenda of either of the
authors.

ONLINE
BY KING BANAIAN AND
For the full report,
log on to
MANA KOMAI MOLLE Impact of Indicators on St. Cloud
St. Cloud State University
www.stcloudlive.com. Leading Economic Indicators
Four of the six — APRIL 2024 —
indicators of the St. Cloud
Area Leading Economic
Indicators index (LEI) were
positive in the quarter of
February through April 2024. ► The survey results
Business responses to have more impact on LEI
future conditions in the St. than the four quantitative
Cloud Quarterly Business indicators but largely can
Survey, initial claims for cancel each other this
unemployment insurance, quarter.
business incorporations, and ► The largest impact of
the level of the St. Cloud 11 the quantitative indicators Type something

Stock Price Index all drove came from the strong stock

St. Cloud labor force the index higher. Responses

to current conditions and
price performance of the
St. Cloud 11.

growing slowly
the changes to the level of ► The predicted gain in
professional and business private employment roughly
services employment pulled matches the growth in the Type something
the index down. labor force over the last
BY KING BANAIAN AND stands as of May 31 more We create LEI through year, leading us to expect
MANA KOMAI MOLLE than 30% above its year- a model that combines no real change in the local
St. Cloud State University ago levels. More details a quarterly survey with unemployment rate.
about the index appear monthly data to predict We can also note what is
The St. Cloud area nearby in this report. private sector employment moving the index within the ► The same concerns February to April quarter.
labor force continues to Perhaps reflecting four to six months after survey responses. about compensation Should price increases
grow at a very slow rate, the challenges of higher the date of the survey. The ► The positive impact dragged on the current lessen, this may lead to
climbing by 0.3% (377 interest rates, the value of index is currently predicting of future conditions largely conditions component of even greater pressure on
workers) over the last 12 building permits for single- a 0.6% rise in private sector turns on expectations for an LEI. business performance and
months to April 2024. family homes in the city employment in the 4-6 easing of hiring issues, both ► There is a positive slow hiring in the second
Household employment of St. Cloud fell by almost months after May, after in the availability of qualified impact on employment half of 2024.
(the number of people in 8%. The city reported 18 adjusting that series for workers and in pressure to from the ability of firms to
the St. Cloud MSA who development projects seasonality. increase compensation. increase prices over the
are employed) grew by with value greater than
0.6% (665 workers) in that $250,000 in 2024 through
same period. Thus, the May 9, compared to 8 such

St. Cloud Stock

unemployment rate fell projects in 2023 through
to 2.8% from 3.0%, faster the same date. The St. Cloud 11 Stock Price Index
(Nov. 1994 = 100)

Price Index
than the drop in the state Central Minnesota Builders
or the Twin Cities. Association reported that
Other indicators were 57 building permits were High: 1,380 on 5/24/2024
positive. Initial claims for pulled in all area cities 1400

unemployment benefits in January through April The St. Cloud 11 Stock Price Index
1300
fell by 6.5% and the St. 2024, compared to 58 in rose 13.9% between Feb. 1 and May
Cloud 11 Stock Price Index the same period last year. 31, compared with 4.2% for the S&P Previous high: 1,167 on 1/4/2022
1200
500 and 2% for the Dow Jones 30
Industrials. The index made a new all-
St. Cloud Economic Indicators
1100
time high of 1380 on May 24. Nine of
11 stocks rose this period, powered 1000
by Quanta Systems (a firm that
includes Blattner Company of Avon) 900
which rose 42.2%, as well as a 32.2%
increase in Pilgrim’s Pride and a 24.9% 800
increase in New Flyer. Encore Capital
Group fell by 11.7% during this time. 700

600
3/8/2021
4/8/2021
5/10/2021
6/10/2021
7/13/2021
8/12/2021
9/14/2021

4/25/2022

2/8/2023
3/13/2023
4/13/2023
5/15/2023
6/15/2023
7/19/2023
8/18/2023
9/20/2023
10/14/2021
11/15/2021
12/16/2021
1/19/2022
2/18/2022
3/23/2022

5/25/2022
6/28/2022
7/29/2022
8/30/2022
9/30/2022
11/2/2022
12/5/2022
1/6/2023

5/31/2024
10/20/2023
11/21/2023
12/22/2023
1/25/2024
2/27/2024
3/28/2024
4/30/2024

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