WASHINGTON (MNI) – The following is the text of the Federal
Reserve’s Beige Book survey Ninth District summary, published Wednesday:

NINTH DISTRICT–MINNEAPOLIS

The Ninth District economy grew moderately since the last report.
Consumer spending, tourism, residential real estate and construction,
services, manufacturing, energy, mining and agriculture saw increases.
Commercial real estate was flat at low levels, and construction activity
was slow. Labor markets remained weak, but some signs of hiring were
noted. Overall compensation levels were flat, and price increases were
moderate.

Consumer Spending and Tourism

Consumer spending increased modestly. A Minneapolis-St. Paul area
mall noted that February same-store sales were up 7 percent compared
with a year ago; traffic levels were up even more. A major
Minneapolis-based retailer reported that same-store sales in February
were up about 2 percent compared with a year earlier. Recent retail
activity in Great Falls, Mont., has picked up modestly; Canadian traffic
was solid. A Minnesota-based restaurant and bar chain noted that March
sales and guest counts were up over 5 percent compared with a year ago,
while another Minnesota-based restaurant chain reported that March sales
were down 2 percent.

Vehicle sales picked up in March compared with a year ago when
sales were substantially down. A number of dealerships in the
Minneapolis-St. Paul area reported that sales were up over 40 percent in
March compared with a year ago; strong incentives by automakers helped
boost sales. Recent vehicle sales have been steady in North Dakota,
according to a representative of an auto dealers association.

Overall travel and tourism activity was up slightly. A ski resort
in northern Minnesota noted that February and March ski lift sales and
lodging were higher than a year ago. A Minnesota-based travel agency
noted that corporate travel during February and March was up slightly
from a year ago. Winter tourism activity was about even with a year ago
in Montana, but tourism-based businesses noted an uptick in February and
March, according to an official. In northwestern Wisconsin, excellent
snow conditions boosted snowmobiling and cross-country skiing in
February; warm weather in March brought an early end to snow sports, but
tourism businesses are optimistic for the summer season.

Construction and Real Estate

Commercial construction was weak. February nonresidential permits
in Sioux Falls, S.D., were substantially lower than a year earlier. A
producer of commercial construction materials said demand has been
slackening. However, several hotel and medical developments are in
progress in Great Falls, Mont.

Meanwhile, residential construction showed signs of strengthening.
March home building permits for the Minneapolis-St. Paul area more than
doubled in value from the same month a year earlier-their highest level
since 2007-primarily due to gains in the multifamily sector. In
contrast, February residential permits in Sioux Falls decreased 21
percent from a year earlier. Construction activity in western Montana
continues to be very slow, according to developers there.

Commercial real estate was flat at low levels. A commercial real
estate broker in Fargo, N.D., said vacancy rates were down slightly for
office properties, but the industrial segment was weaker. A Minnesota
commercial broker said rents there were at their lowest levels since
1990.

Residential real estate continued to rebound. Closed sales in late
March were 11 percent higher than a year earlier in Minneapolis-St.
Paul, and sales prices increased. Sales also picked up in western
Montana, due in part to big reductions in asking prices.

Services

Overall activity increased slightly in the professional business
services sector since the last report. Contacts from information
technology and Web development firms noted solid orders. A law firm that
specializes in debt collections and another that specializes in
bankruptcies were expanding due to strong demand. However, contacts from
other law firms indicated that new business was unchanged. Architects
indicated flat activity at low levels.

Manufacturing

Manufacturing output was up since the last report. A March survey
of purchasing managers by Creighton University (Omaha, Neb.) showed that
manufacturing activity increased significantly in Minnesota and South
Dakota and was flat in North Dakota. A small Minnesota transmitter maker
plans to expand into a larger facility. In North Dakota, a wind energy
component manufacturer plans to build a plant.

Energy and Mining

Activity in the energy and mining sectors increased since the last
report. Late-March oil exploration increased significantly from early
February. A major electrical utility recently announced plans for a
large-scale wind energy farm in western Minnesota. Several sources noted
solid prices and demand for iron ore, as production in February
increased slightly from January levels.

Agriculture

Agricultural activity increased. The calving season was progressing
very well due to the mild end to winter across most of the District.
Cattle producers were optimistic, as they expected a continued uptick in
output prices. District farmers planned to plant 3 percent more soybean
acres, 4 percent fewer wheat acres and about the same number of corn
acres as last year, according to the U.S. Department of Agriculture.
Meanwhile, producers of organic agricultural products noted a decrease
in demand, and dairy producers were concerned about softening in output
prices.

Employment, Wages and Prices

Labor markets remained weak, but some signs of hiring were noted. A
tractor supply store in eastern Montana reported receiving more than 30
applications for every job opening. Employers in the Sioux Falls area
noted a relatively large number of applications for seasonal jobs. Also
in South Dakota, 35 workers were laid off at a technology firm, and
about 25 workers were laid off at a business outsourcing company. A
North Dakota manufacturer announced plans to lay off 60 workers.

In contrast, two employment placement firms in Minnesota reported
an increase in hiring for some entry level positions and an increased
interest in executive placement services. Also in Minnesota, a bank
announced intentions to hire more wealth management advisors, a wind
energy project just under way will create 150 jobs and an auto dealer
will hire 15 salespeople.

Overall wages were flat, as a number of contacts noted that wages
and salaries at their companies were level with a year earlier. The
University of Minnesotas faculty senate recently approved a measure to
cut pay temporarily for most University employees by about 1 percent.

Price increases were moderate. Minnesota gasoline prices at the end
of March were up slightly from the end of February. However, copper and
nickel prices increased since the last report, as well as some prices
for lumber and steel products.

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

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