Clearer Skies Forecast for Minnesota Economy

If Minnesota’s manufacturers are a bellwether, then Minnesotans can rest a little easier about the economy. According to the third annual State of Manufacturing survey sponsored by Enterprise Minnesota and partners, the state’s manufacturers are expressing more optimism about the direction of the economy. Forty percent foresee economic expansion, while less than one in ten anticipate a continued recession in 2011, according to the annual poll of 400 manufacturing executives from a cross-section of Minnesota companies and locations. This represents a 47 percent drop in executives who predicted a recession and a 32 percent jump in those who projected growth in the first survey two years ago. “The clouds are beginning to part, Enterprise Minnesota president and CEO Bob Kill said in a statement. “We saw manufacturing lead the way in job growth last year, and the optimism for this year should be a positive sign for the year ahead.”

More than half of Minnesota firms (51 percent) expect to see an increase in gross revenues this year, when only 23 percent predicted an increase for 2009. Positive readings extend to profitability, where 39 percent anticipate an increase (up from a mere 17 percent in 2009), and even to capital expenditures, where one out of every three executives (32 percent) expects spending will increase in 2011.

However, 47 percent of manufacturers believe that Minnesota is on the wrong track in terms of being a business-friendly location, while 41 percent disagree, a gradual improvement. Two years ago, 31 percent of executives said Minnesota was on its way to being a competitive business location.

These attitudes are borne out by reported increases in sales, profits, market values, and employment at Minnesota’s 100 largest public companies in 2010. The Star Tribune recently reported that sales at the Star Tribune 100 companies rose a net 5.7 percent, compared with a drop of 0.3 percent in 2009. Profits spiked nearly 14 percent in 2010 after falling 1.2 percent in 2009. Employment rose 0.7 percent last year, compared with a loss of 25,000 jobs in 2009.

Among other signs that the recovery is gaining traction is that sales rose at 78 companies in 2010, while only 38 companies experienced increases in 2009; 80 companies posted profits, up from 75 the year before, and 66 added workers in 2010. In 2009, only 36 companies added jobs.

At 6.6 percent, Minnesota’s seasonally adjusted unemployment rate for March ranks 11^th in the nation.

Anyone who is a regular listener to Garrison Keillor’s Minnesota-based radio show Prairie Home Companion has no doubt developed an image of its people as hardy, hard-working stock. This is confirmed in a recent Minnesota Public Radio report that during the recession, thousands of Minnesotans became entrepreneurs.  Minnesota is one of four states participating in a pilot project called Growing America Through Entrepreneurship, a program that helps dislocated workers age 45 or older who are interested in starting a business. It provides in-depth business readiness assessment and training. Over the past four years, the report said, the Secretary of State's office recorded more than a quarter of a million new business filings, a 16 percent increase from the previous four years. Business filings in 2009 showed the largest one-year gain since 2002.