Christina Hogan, vice president, and Mitch Jacobs, president and CEO of V-TEK in Mankato. Hogan said manufacturers like hers are struggling to replace retiring engineers and skilled laborers. File photo

MANKATO — Low unemployment and thriving residential development in the Mankato area boosted southwest Minnesota’s short-term economic outlook last summer, according to a university report released Tuesday.

Led by growth in multi-family housing, the value of residential housing permits in the Mankato area rose 9.1 percent in September compared to the same month a year before. And jobless claims declined by 17 percent in that month, also compared to the previous year.

The combined effect slightly lifted the Index of Leading Economic Indicators for southwest Minnesota, signaling steady economic growth through early 2018. The index, calculated by St. Cloud State University researchers using a mix of economic data, is designed to predict the performance of the regional economy in the next four to six months.

Two of the four elements of that index — unemployment claims and residential permits — were particularly strong in southwestern Minnesota. The other two elements (new business filings and a survey of rural bankers) were minor drags on the region’s economic performance.

Though it is difficult to draw specific conclusions about the Mankato area from the report, which groups 23 counties in south-central and southwest Minnesota, it specifically notes Mankato-area economic performance was “generally favorable.”

Statewide, all but two of the state’s six areas were predicted to experience steady growth in the final months of 2017 and beginning of 2018.

There were a few minor negatives in the Mankato-area economic data.

Average weekly work hours in the Mankato area dipped to 30.3 hours in September compared with 31.4 hours the previous September. It’s somewhat puzzling given the increased demand for workers.

John Considine, the director of regional business intelligence for Greater Mankato Growth, speculated that businesses may be ramping up hours for newer employees.

The cost of living in the Mankato area also rose by 3.7 percent in the spring of 2017 compared with a year earlier. That was more than matched by private-sector earnings, which rose by 5.7 percent in September compared to the previous year.

Still, growth in housing and jobs outpaced any negatives in southwestern Minnesota.

‘More jobs than people’

Christina Hogan, vice president of Mankato-based V-Tek Inc., said manufacturers like hers are struggling to replace retiring engineers and skilled laborers.

“What we’re seeing is more jobs than people and one of the biggest concerns as a manufacturing employer that we have is finding skilled technical labor,” said Hogan, a past president of the Southern Minnesota Area Human Resource Association.

She had high praise for South Central College’s mechatronics program, saying “those students are coming out with real-life, hands-on experience and they hit the ground running.”

But persuading them to stay in the Mankato area has been a challenge. Of the four mechatronics graduates hired by V-Tek as interns and offered full-time employment, all moved to the Twin Cities within six months, Hogan said.

Though a tight labor market can be difficult for employers, it is generally a boon for workers.

Considine said, “If I had to pick between low unemployment and high unemployment, I would pick low unemployment every time, though it does create challenges.”

Some solutions include efforts to recruit newcomers — Google “moving to Mankato MN” and the first result will be a GMG site on the topic — and help workers transition into more in-demand careers.

After all, news of hot demand for engineers and laborers with computer programming experience is cold comfort for workers without these skills. But Greater Mankato Growth and others are trying to smooth the path for profitable mid-career transitions.

Good times for builders

Jeff Lucas, vice president of the Minnesota River Builders Association’s board and project manager for Elysian-based Henninger Construction, said Mankato-area demand continues to be strong in multi-family construction. But new multi-family housing looks much different than apartments built in previous decades.

Three-story row houses with a garage and multiple bedrooms (for rent or purchase) are popular with single professionals and career-oriented couples who want a home but without the hassles of upkeep and maintenance, Lucas said.

There also continues to be demand for more expensive, custom-built single-family homes, he said.

“With the mix of residential construction, it’s a wonderful time to be a builder,” Lucas said.

He predicts these trends to continue through 2018, fueled by growth in agriculture, industry and retail combined with relatively affordable living.

“Any direction you go in Mankato right now there’s growth,” he said.

A fluctuating figure

Though the rising index is a welcome sign for southwest Minnesota’s economic fortunes, it has fluctuated widely in recent years. For example, though it rose in the third quarter of 2017, it fell by a slightly higher amount in the second quarter.

Overall, according to the report, the index has “slowly drifted downward since the end of 2013” in southwest Minnesota.

There were mixed signals in the latest figures, too. One of the four ingredients of the index is the “Rural Mainstreet Index,” which is calculated using survey data from rural bankers and business leaders.

That measure went slightly down in the third quarter, showing local economic experts did not hold particularly rosy outlooks.

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