|By Marketwired .||
|June 23, 2014 06:00 AM EDT||
MINNEAPOLIS/ST. PAUL, MN -- (Marketwired) -- 06/23/14 --
- Minnesota economy growing at a firm pace, well ahead of the national average
- GDP growth is expected to remain healthy at 2.5 percent in 2014
- The Twin Cities show solid growth thanks to a variety of service industries
- Jobs lost during the recession now recovered
The Minnesota economy continues to grow at a firm pace and growth is expected to remain healthy at 2.5 percent in 2014, according to a Special Economic Close-up Report on Minnesota issued today by BMO Economics. Real GDP in the state grew 2.8 percent in 2013, well ahead of the national average. Manufacturing output rebounded after a soft patch in 2012, while trade, finance and professional services all posted solid growth.
In the twin Cities (Minneapolis-St. Paul-Bloomington), the sturdy and diverse economy is expected to remain on a solid growth track in the years ahead, according to the report. A cyclical upturn in manufacturing and exports will help, as will a continued recovery in the housing market. Beyond that, the bigger picture is that the area boasts exposure to a wide swath of service industries which continue to churn out steady job growth.
"Our state and metro area have a lot going for them with our job growth, diversity of industries and the confidence businesses have shown by investing in their operations and people," said Todd Senger, Minnesota Regional President, BMO Harris Bank. "This report confirms the positive outlook we have seen among businesses and business owners in the last few months, and we fully expect to see the upturn continue as more and more businesses feel the effects of the growth in our area."
Job growth is an important positive indicator in the Twin Cities, averaging a 1.4 percent year over year pace through the first 4 months of 2014, just slightly below the national rate; all the jobs lost during the recession have now been recovered. At 4.5 percent, the unemployment rate remains well below the national average, and has fallen 0.5 percentage points in the past year. Private-service industries are posting the strongest job growth in the region with finance, professional and scientific services and leisure/hospitality-related industries leading the way.
"The area includes more Fortune 500 companies per capita than any other major metro region in the United States; this diversity helped soften the downturn, with real GDP falling 3.5 percent peak-to-trough on an annual basis versus 4 percent for all metro areas," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "Many Midwest cities, such as Chicago, St. Louis and Indianapolis, are just now seeing real GDP return to pre-recession levels. Contrast that to Minneapolis-St. Paul where GDP was 5.2 percent above the 2008 high according to the latest available city-level data."
While many metro areas are still seeing factory output below pre-recession levels, output in Minneapolis rebounded more than 7 percent per year since bottoming in 2009, and now sits well above the prior peak seen in 2006. As a result, the industrial availability rate has fallen sharply to 6.7 percent by the first quarter of 2014, down more than 5 percentage points from the post-recession high in early 2010 and well below the 11.1 percent national average.
Conditions are also improving within the regional housing market. "The region has a lot going for it in terms of the housing market. Home sales are increasing, the vacancy rate is down to pre-recession levels, and the months' supply of single-family homes on the market averaged only 3.5 percent during the past year," said Mr. Gregory. "However, while the resale market is improving, construction activity remains soft. The number of private housing permits was just under 12,000 in the twelve months through April, down from a 25,000 per year pace in the decade leading up to the recession. On the bright side, this is still twice the level seen between 2009 and 2011." After harsh winter weather weighed on building activity across much of the Midwest early this year, continued steady gains in homebuilding are likely as the housing market recovery continues.
To view a full copy of the report, visit www.bmocm.com/economics.
About BMO Capital Markets
BMO Capital Markets is a leading, full-service North American financial services provider, with more than 2,300 employees operating in 16 North American offices and 29 worldwide, offering corporate, institutional and government clients access to a complete range of investment and corporate banking products and services. BMO Capital Markets is a member of BMO Financial Group (NYSE: BMO) (TSX: BMO), one of the largest diversified financial services providers in North America with US$532 billion total assets and more than 45,500 employees as at January 31, 2014.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris ® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $582 billion in assets (as of April 30, 2014).