WASHINGTON (MNI) – The following is the text of the Ninth District
Beige Book summary of current economic conditions, published Wednesday:

NINTH DISTRICT–MINNEAPOLIS

The Ninth District economy grew modestly since the last report.
Consumer spending, tourism, residential construction, services,
manufacturing, energy, mining and agriculture saw increases. Activity in
the commercial and residential real estate sectors decreased, while
commercial construction remained weak. Labor markets strengthened
slightly since the last report. Wage increases were moderate, and prices
increased modestly.

Consumer Spending and Tourism

Retail spending increased moderately. A major Minneapolis-based
retailer reported that same-store sales in July were up 2 percent
compared with a year earlier, and a Minnesotabased restaurant chain
reported that recent sales increased moderately compared with a year
ago. July sales at two Minneapolis area malls were above year-ago
levels, and mall traffic seemed to hold steady during August. A retailer
in Montana noted that sales for appliances and electronics were up about
10 percent compared with a year ago. In southwestern Montana, a
furniture store reported that recent sales increased; however, sales at
a lumber and home improvement retailer were down. A chamber of commerce
representative in northwestern Wisconsin noted that while retail sales
had been tracking downward compared with a year ago, there was a recent
pickup due to solid tourism activity.

Vehicle sales were up slightly in North Dakota, according to a
representative of an auto dealers association. The owner of a Minnesota
domestic auto dealer said that August sales were up from a year ago, but
corporate customers were more cautious about purchases.

Summer tourism activity was solid. Resorts in north-central
Minnesota reported that lodging revenue was up about 10 percent on
average compared with a year ago; restaurants also saw strong increases.
Tourism activity was above year-earlier levels in North Dakota,
according to an official. In western South Dakota, the number of visits
and sales at attractions were on par with last years strong summer
season. Visits to Yellowstone and Glacier national parks were higher
than a year ago, but on average tourists were spending less.

Construction and Real Estate

Commercial construction was slow. Few large projects were under way
in the Minneapolis-St. Paul area. Commercial permits in Montana were at
about half of their year-ago levels for both June and year-to-date.
Commercial building in Fargo, N.D., has recently slowed despite a
relatively low unemployment rate in the area. Residential construction
continued its mild recovery. The number and value of August residential
permits in Minneapolis-St. Paul increased from both July and June
levels. The value of residential permits in Sioux Falls, S.D., was
roughly flat in July from a year earlier. Activity in commercial real
estate markets was down. A commercial brokerage in Minneapolis said that
while unused space continued to increase, the rate of increase seemed to
have slowed recently. Vacancy rates there were at record highs; the
retail sector was particularly hard hit. A bank director in Billings,
Mont., said market activity there was down substantially and was
expected to continue to drop. Recent residential real estate activity
decreased from a year earlier. July closed sales in Minneapolis-St. Paul
were down 40 percent from a year earlier; however, median sales prices
were up more than 2 percent.

Services

Activity in the professional business services sector increased
since the last report. Contacts from the legal sector reported that
billings during July were up from a year ago, especially for firms that
deal with bankruptcies. A call center is expanding in South Dakota.
Appraisers and other professional services firms that support home
refinancing reported strong activity over the past month.

Manufacturing

Manufacturing output was up since the last report. A July survey of
purchasing managers by Creighton University (Omaha, Neb.) showed strong
increases in manufacturing activity in Minnesota and South Dakota, and
slight increases in North Dakota. A drainage pipe maker is opening a
plant in South Dakota. In Minnesota, two new solar energy component
manufacturing facilities are planned. In the Upper Peninsula of
Michigan, a coated paper company noted an increase in orders over the
past two months from earlier this year and last year.

Energy and Mining

Activity in the energy and mining sectors increased since the last
report. Late-August oil exploration increased from mid-July. New wind
energy projects are planned in the Dakotas. Most District mines were
operating at near capacity. Iron ore production in Minnesota increased
in July compared with June. Meanwhile, in the Upper Peninsula, a new
copper mine was under construction. A new coal mine was under
consideration in Montana. Exploration for a potash mine was under way in
North Dakota. Agriculture Agricultural activity increased. Crop
conditions improved across most of the District. The price of wheat
surged since the last report. Sugar beet producers expected an early
harvest with large yields, but were concerned about a judges ruling to
halt the use of GMO seeds until the conclusion of an environmental
impact study. Meanwhile, the Minneapolis Feds second-quarter (July)
survey of agricultural credit conditions indicated that lenders expect
overall agricultural income and capital spending to decrease in the
third quarter.

Employment, Wages and Prices

Labor markets strengthened slightly since the last report. After 25
straight months of year-over-year employment decreases in Minnesota and
Wisconsin, both states recently posted modest year-over-year employment
increases. Initial claims for unemployment insurance in Minnesota were
down 24 percent in July compared with July 2009, but were still higher
than July 2008 levels. A temporary staffing firm in Minnesota noted that
demand for industrial workers was even in July, but has picked up
somewhat in August. Despite recent strengthening, overall labor market
conditions remained weak. In Minnesota, a hospital recently announced
plans to eliminate up to 250 full-time positions by year-end. Two
Minnesota state universities announced layoffs of almost 40 tenuretrack
faculty in anticipation of future funding cuts. There were plenty of
qualified applicants available to fill open positions in Montana. In
addition, fewer foreign workers were needed to fill seasonal jobs in
Montana this past summer compared with a year ago. Wage increases were
moderate. Average wages for manufacturing employees in District states
for the three-month period ended in July 2010 were only 1 percent higher
than the same period a year ago. A nurses union in Duluth, Minn., called
for a one-day strike; staffing levels were the primary issue. In
Montana, a bank director noted that a number of employers were uncertain
about their obligations under the new health care system and therefore
were hesitant to make long-term commitments regarding benefits. Overall
prices increased modestly. Minnesota gasoline prices decreased slightly
from mid-July through the end of August. Fertilizer prices were lower
than a year ago. Meanwhile, prices for copper and lead increased from
mid-July through the end of August.

** Market News International Washington Bureau: 202-371-2121 **

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