Local economy mixed

By Tim Krohn
The Free Press

MANKATO April 06, 2009 01:41 am

— The national economy continues to be a mixed bag, as job losses mount but the stock market rises.
In the Mankato area, the picture is considerably brighter.
Real estate and auto sales appear to be getting a spring boost, unemployment is lower than around the state, and retail sales are holding their own.
“There seems to be a little better feeling about the economy overall,” said Dale Schmitt, the new owner of Mankato Motor Co., formerly Clements.
In fact, aggressive incentives led to a very good March, Schmitt said. Compared to sales by Clements last March, Mankato Motor this March sold 15 percent more Volkswagens, 83 percent more Nissans and 250 percent more Chevrolets, he said.
“The manufacturers were real aggressive on the incentives,” Schmitt said. “And it’s continuing into April. They’re putting a lot of money on the hood to attract customers.”
The total number of vehicles sold in Mankato in February and March won’t be known for a month or so, after the city reports how much local tax it collected on vehicle sales. The city collects $20 for each vehicle sold.
In January, the number of vehicles sold in Mankato slid to 474, down from 864 vehicles sold in January 2008.
The retail sales tax collections in Mankato in January were down slightly from January of 2008. The city collected $431,000 in local taxes, about $37,000 less than January ’08.
Lodging in Mankato hotels was strong. The city collected $30,556 in lodging taxes in January, up considerably from a year earlier.
Mankato continues to be insulated from the big loss of jobs being felt in much of Minnesota and the nation.
The February unemployment rate in the greater Mankato-North Mankato region stood at 6.6 percent, considerably lower than any other metropolitan area in the state.
Duluth and St. Cloud had the highest metropolitan area unemployment at 9.8 percent. Minneapolis-St. Paul was at 8.2 percent and Rochester at 7.2 percent.
But go further out from Mankato and the picture isn’t as rosy. In the nine-county area in and around Mankato unemployment rate was 8.8 percent in February.
While March figures aren’t yet out for counties, the national unemployment rate jumped, according to a report out Friday.
The nation’s unemployment soared to 8.5 percent in March, the highest since late 1983, as a wide swath of employers eliminated 663,000 jobs.
Economists say there’s no relief in sight.
The average work week in March dropped to 33.2 hours, a new record low.
Since the recession began in December 2007, the economy has lost a net total of 5.1 million jobs, with almost two-thirds of the losses occurring in the last five months.
Home sales in recent months fell to their lowest point, but there are signs of a spring resurgence.
In the 10-county region, 63 homes sold in January and 76 sold in February. That’s down from 89 and 113 for the same months a year earlier.
But Realtors say recent weeks have seen an upsurge in customers looking and buying, thanks to interest rates at 50-year lows, lower housing prices and tax incentives (see related story).
So far, new home construction has not seen a rebound. The number of new home starts in Mankato and North Mankato has been sliding since the high of 24 starts last April.
Businesses haven’t been building new, either, but that has made remodeling existing facilities more popular.
There was more than $1.8 million in commercial renovation in Mankato and North Mankato in February, the most recent month for which information is available.
A continuing bright spot for consumers is the relatively low gasoline prices. The federal government’s Energy Information Service is predicting stable prices in the Midwest throughout the spring and summer.
With consumption expected to continue lagging, prices are expected to stay around $2 a gallon into the fall.