CURRENT BUSINESS CONDITIONS FUTURE BUSINESS CONDITIONS

ST. CLOUD AREA ST. CLOUD AREA

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

Level of business activity for 27.3 24.2 48.5 21.2 -11.8 -4.8 Level of business activity for 9.7 35.5 54.8 45.1 13.4 9.5
your company your company

Number of employees on Number of employees on

your company's payroll 12.1 63.6 24.3 12.1 11.8 -18.2 your company's payroll 6.7 73.3 20 13.3 6.3 0

length of the workweek for 3 84.9 12.1 9.1 5.9 -9.1 length of the workweek for 0 93.5 6.5 6.5 6.3 4.5
your employees your employees

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

machinery, structures, etc.) by 12.1 54.5
Type something 33.4 21.3 11.7 31.8 machinery, structures, etc.) by 6.5 61.2
Type something 32.3 25.8 25 4.8
your company your company

Employee compensation 3 48.5 48.5 45.5 47.1 31.8 Employee compensation 0 48.4 51.6 51.6 50 0
(wages and benefits) by your (wages and benefits) by your
company company
Prices received for your Prices received for your
companyʼs products 3.1 59.4 37.5 34.4 29.4 14.3 companyʼs products 0 55.2 44.8
Type something 44.8 50 9.5

National business activity 30.8 57.7 11.5 -19.3 -6.6 -22.2 National business activity 8.3 70.9 20.8 12.5 0 20

Your companyʼs difficulty 3.2 74.2

Type something 22.6 19.4 20 0 Your companyʼs difficulty 10.3 Type something
69 20.7 10.4 0 9.5
attracting qualified workers attracting qualified workers

*Source: SCSU Herberger Business School, Department of Economics *Source: SCSU Herberger Business School, 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

Local businesses report

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

optimism amid slow growth

BY KING BANAIAN AND MANA We distributed the surveys to ‘steal’ employees away.”
KOMAI MOLLE after the 2024 elections. One indication that economic KEY RESULTS
St. Cloud State University The National Federation of activity may nevertheless stay
The St. Cloud Area Quarterly Independent Business’s Small soft is the reading on the future
Business Survey found Business Economic Trends difficulty attracting qualified 55
businesses reported higher survey saw a similar jump in workers. It is insignificantly
50 50
economic activity in the quarter optimism in November, along above zero and has been fairly
Di usion Index (% increase - % decrease)

between August and October with a significant decrease in stuck over the last year. 45 45.1 44.8
2024. Fifty-five percent of economic uncertainty. This may Changing consumer 40
respondents expected greater also be the case in our survey. purchasing patterns for food
business activity for their firms As the Federal Reserve have changed, said another 35
over the next six months. continues to reduce interest respondent. A third noted, 30
However, there was much rates, our survey still finds many “budget cuts at SCSU have
25
less movement in responses to businesses expect to receive affected our business.”
the other seven questions about higher prices for their products We would not expect to 20
aspects of their businesses. in the next six months. This has see the results of this new 15
None of the changes between remained high for the last three optimism in the current data 13.4
August and December was quarters. with the exception of the stock 10 9.5 9.5 10.4 9.5
statistically significant in either They also expect to pay market, which has reacted 5
table. higher compensation for to the election results by
0 0
Some respondents indicated workers, though this level has moving higher. At present, area
issues with state mandates that been around this level since the employment is trending below Future Business Activity Future Prices Received Future Di iculty
“leave employers with no worker Great Financial Crisis in 2008- the usual rise that happens in Attracting Qualified
and paid wages for the day.” 09. One respondent indicated fall. It will be another quarter or Workers
Said another, “All we do is cover “competing employers have two before we can say whether
for absent employees ... we are shown a willingness to offer this optimism becomes stronger Dec 2024 Aug 2024 Dec 2023
tired!” above market comp. packages growth for 2025 and beyond.

We asked:
BY KING BANAIAN Special Question #1
The cost of doing business
Special Question #2
AND MANA KOMAI MOLLE
St. Cloud State University Relative cost increases of products, Employee/employer work-compensation
The LTM (otherwise known inputs and employee compensation dynamics
as the Rolling Twelve Months)
is a time period often used to
analyze a company’s business 50
performance. 26%
In the last 12 months, the 45 25
44%
economy was marked by a 23%
persistent but tamed inflation, 40
interest rate cuts (50 basis 20
19%
point cut in the Federal Funds 35
Rate in September followed
16% 16%
by 25 basis point cut in 30 15
November), and a resilient
labor market in spite of a slight 25 25%
increase in unemployment from 10
about 3.5% to about 4.2%. 20
19%

15
WE ASKED: In the last 12 13% 5
months:
10
► a) Price increases for my
products were greater than 0
5
price increases for my inputs, Employees ask for Employees express Employees are less Employer initiated Employer o ered
and greater than the increase 0
higher salaries disappointment in productive incentive pay more flexible work
in my costs of compensating through competing current salaries environment
Prod/Input/Emp Input/Prod/Emp Input/Emp/Prod Emp/Input/Prod job o ers
employees.
► b) Price increases for my
inputs were greater than price
increases for my products, percent of the businesses WORK-COMPENSATION disappointment in how much (or reactively) initiated
which were greater than report their output prices DYNAMICS they were earning. incentive pay schemes
the increase in my costs of outpacing their input costs, In spite of a small uptick ► c) My workers seem less and more flexible work
compensating employees. excluding labor. Only for 13% of in unemployment, the labor motivated and productive than environments in an attempt to
► c) Price increases for our respondents output prices market remained robust in in prior years. improve employee satisfaction
my inputs were greater than outpaced both labor and other 2024, wage growth exceeded ► d) I used incentive pay and retention.
the increase in my costs of input prices. inflation, and flexible work to increase productivity and “Employees are less loyal
compensating employees, “Keeping up with wage environments remained provide an avenue for workers and quicker to move if any
and both were greater than growth pressures has proven in place. The labor market to earn more. component of the employment
the price increases for my to be very difficult … leading remained competitive for ► e) I provided more flexible package does not satisfy
products. to reduced profitability,” one employers who focus more hours or more work-from-home them. A very tough year,” one
► d) My costs of respondent says. strongly on retention as opportunities to encourage respondent says.
compensating employees “It was one of our toughest a beneficial employment workers to stay with my firm. “Employees aren’t leaving
rose faster than prices for my years — had to make price strategy. as often as they had been but
inputs, and both were greater concessions while dealing with Our survey responses when we do have to hire, we are
than the price increases for my less sales due to the economy WE ASKED: Check all that indicate that 26% of the running into employees who
products. and cautiousness of clients apply. Over the last 12 months: employees have asked for are absent more and have more
spend,” another replies. ► a) I experienced more higher salaries and wages by ‘family emergencies’,” another
Sixty-nine percent of “Products and vender prices workers asking for higher pay presenting their employers replies.
our responses indicate that, have gone up 10-15% more by bringing competing job competing job offers, “It will take more time for
in the last 12 months, both than years past; with this offers and threatening to quit. while 32% simply express worker wage and flexibility
labor and other input costs increase I believe we will be (Do not choose this item if disappointment with their pressure to subside, but I
have outpaced output prices down in net profits this year,” wages in your firm are set by salaries and show less interest/ believe it will with less job
received by the businesses another respondent explains. collective bargaining.) productivity in their work place. opportunities overall in
causing a reduction in their ► b) More workers this Forty-two percent of our the marketplace,” another
profit margins. Nineteen year came to discuss their respondents have proactively respondent explains.
St. Cloud suffers two (permanent?) growth shocks
Private sector employment, St. Cloud MN MSA 1990-2024
(seasonally adjusted, log scale)

140,000

130,000
Every three months, two St. Cloud State
University economists analyze the latest business
and worker data, as well as the results from a survey 120,000
of local business leaders. The result is the St. Cloud
Area Quarterly Business Report. It has been published 110,000
four times a year since 1999. St. Cloud LIVE is the
publishing partner for this content.
100,000

MEET THE AUTHORS: 90,000

80,000
KING BANAIAN
Center for Policy 70,000
Research and Community
Engagement
60,000
320-308-4797
50,000
Feb-90
Mar-91
Apr-92

Oct-98

Oct-11
May-93
Jun-94
Jul-95
Aug-96
Sep-97

Nov-99
Dec-00
Jan-02
Feb-03
Mar-04
Apr-05
May-06
Jun-07
Jul-08
Aug-09
Sep-10

Nov-12
Dec-13
Jan-15
Feb-16
Mar-17
Apr-18
May-19
Jun-20
Jul-21
Aug-22
Sep-23
Oct-24
MANA KOMAI MOLLE
Actual Trend 1990-2008 (annual growth 2.29%) Trend 2008-2020 (annual growth 1.45%)
St. Cloud State University
Department of Economics
320-308-4781
King Banaian specializes in analyzing data and
Leading indicators forecast weak
growth over next six months
writing about it in the second portion of this report.
Mana Komai Molle collects and analyzes
responses to the St. Cloud Area Business Outlook
Survey, covered in an early portion of the report.
Questions about the survey can be directed to BY KING BANAIAN AND
her. Special questions asked in the survey may at MANA KOMAI MOLLE Impact of Indicators on St. Cloud
times deal with public policy but do not reflect a
political agenda of either of the authors.
St. Cloud State University Leading Economic Indicators
The St. Cloud Index
October 2024
of Leading Economic
Indicators (LEI) show
a forecast of weak
ONLINE growth over the next
six months. Of our six
For the full report, indicators, three were
log on to positive and three were out that far on the time
www.stcloudlive.com. negative. The St. Cloud horizon. In the short-run
11 Stock Price Index and profits are diverted to
the responses to current higher wages and input
Type something
economic conditions purchases.
from the St. Cloud Area Private sector hiring
Quarterly Business last quarter was expected
Survey contributed to rise more than 1,000
positively to LEI, while jobs, most of which due
rising initial claims for to the normal seasonal Type something
unemployment insurance hiring as firms ramped
and responses to future up for higher sales at
business conditions from the end of the year.

St. Cloud
the Survey contributed Instead, private sector
negatively. The other employment fell 300, with We can observe, employment by a third.
two indicators were closures at Oberg Roofing, however, that we still have COVID led to a similar

employment
only slightly positive or B Social restaurant and not returned to the 2019 drop in employment
negative. bar, Oblivion CoffeeBar peak of private sector after April 2020 (we
This result will surprise and Mercantile, and most employment. There have estimate the drop to

growth slows
some readers given the recently Yelloh (formerly been two macroeconomic be about 9,500 from a
overall optimism for Schwan’s) having some shocks to St. Cloud in value of 96,000), though
businesses in the Survey. impact on St. Cloud area the last 35 years: the the new growth rate
However, the LEI chooses employment. Great Financial Crisis in appears slightly faster
BY KING BANAIAN AND are nearby. On the other particular responses as This shortfall may of 2008, and the COVID than the 2008-20 rate.
MANA KOMAI MOLLE hand two indicators we more important than course be temporary pandemic. The first shock Convergence to the
St. Cloud State University track have turned negative, others in determining (the sum of all those dropped private sector 2008-2020 line, however,
with a 10.3% rise in initial future employment closures listed above is employment by more would not be reached by
Area employment claims for unemployment in the St. Cloud area. not known but is likely than 11,000 workers the end of the decade
growth slowed from the insurance and a significant Three questions pick less than 100 workers), (out of 92,000) in the unless something makes
higher levels seen this drop in the value of up the costs of labor and as always data are period after September the economy grow faster.
summer. The seasonal residential building permits and capital, and future subject to revision. We will 2008; had St. Cloud Our indicators are
unemployment rate for the city of St. Cloud. increases in those has have data revisions in the remained on the trend it measuring very small
typically reaches a low in We noted significant correlated historically next Quarterly Business had before then, private changes around these
October, but for St. Cloud permitting for lots in the with short term declines Report. Currently, payroll sector employment now macroeconomic trends,
and for the state overall Waters Edge development in employment. Though employment growth would approach 134,000 and while many are
the rate is higher than at Donovan Lake, with certainly we expect new in the last 12 months workers. Not only did we interested in recession
last October. Labor force several permits pulled capital goods today through October 2024 see a drop during the predictions, these larger
growth slowed also. We but without construction to help employment stands at 0.2%, a far cry Great Financial Crisis, but trends are the more
note that other regional or real estate transaction in future quarters, our from the 1.3% growth we we also saw a slowing important question for the
centers in Minnesota saw taken on the lot. Data from forecast does not reach saw in July. of the growth rate of rest of this decade.
higher labor force growth: the Central Minnesota
The Mankato labor force Builders Association
grew 3.4% in the last 12
months to October, while
shows a decline from
204 building permits in
St. Cloud 11 Stock Price Index
(Nov. 1994 = 100)
Rochester’s rose 5.1%; 2023 through the end of
Duluth on the other hand October to 179 in 2024
saw a decline of 1.1% and (though the city of Sartell
Minneapolis-St. Paul fell has not posted its October High: 1,635 on 11/29/2024
1600
0.6%. building permit data yet,
Over the last year, the so this number may be
St. Cloud 11 Stock Price revised upward but not 1400
Index rose 47.5%. Details likely by 25 new homes.)

Previous high: 1,175 on 1/4/2022

Other Economic Indicators 1200

1000

800

600
Type something

400
12/28/2021
1/27/2022
2/28/2022

8/29/2022
9/28/2022

8/31/2023
10/2/2023
3/29/2022
4/28/2022
5/27/2022
6/29/2022
7/29/2022

10/27/2022

1/31/2023
11/29/2022
12/29/2022

3/2/2023
3/31/2023
5/2/2023
6/1/2023
7/3/2023
8/2/2023

10/31/2023
11/30/2023
12/30/2023
1/31/2024
3/1/2024
4/2/2024
5/1/2024
5/31/2024
7/2/2024
8/1/2024
8/30/2024
10/1/2024
10/30/2024
11/29/2024

Type something

St. Cloud Stock Price Index

The St. Cloud 11 Stock Price offsetting a 31.5% decline in New Axle & Manufacturing, as the Grede
Type something Index moved to a record high in the Flyer. The 13.4% overall gain in the foundry was sold to a private equity
last quarter, reaching a peak of 1635 quarter (Sept. 3 to Nov. 29) was firm. We will also replace Capital
on the last trading day of November nearly double the gain in the S&P One in the index, but have not made
2024. 500 (6.8%) and greater than the a decision on a bank to replace it.
Significant gainers this fall gain in the Dow Jones Industrial These changes will take effect in the
included Capital One (up 32.4%), Average (10.7%) or the NASDAQ next issue of the Quarterly Business
Knife River (+32.8%) and Quanta (9.3%). Report.
Type something Systems (+27.2%), more than In 2025 we will remove American