September 2012: Business Indicators

North Dakota’s economic growth continues at an unprecedented pace. Our unemployment rate is the lowest in the nation at a mere 3 percent, compared to the national average of 8.1 percent. In some areas of North Dakota, specifically those impacted by booming oil development, a severe labor shortage exists. For example, in Williston, the unemployment rate is an unheard of .7 percent and in Dickinson it is only 1.5 percent.

Crude oil production continues to move to record high levels each month. July production was 674,000 barrels per day, nearly 60% higher than just one year ago. With agricultural commodity prices continuing at high levels and a booming labor market, personal income is growing at a rate nearly three times the national average.

Nationally, retail sales were up over 4 percent in July 2012 compared to July 2011. However, in North Dakota, the trajectory of growth in taxable sales and purchases is off the charts. First quarter 2012 data shows growth of over 50% compared to first quarter 2011. The mining and oil extraction category of taxable sales and purchases was up nearly 100 percent, year over year.

Wholesale and retail trade, which together make up nearly 50 percent of total taxable sales and purchases, grew by 66 percent and 27 percent, respectively. Transportation services grew by over 98 percent and construction grew by over 113 percent.

State revenue forecasters are expecting continued growth in taxable sales and purchases, but at a more sustainable rate of growth. North Dakota state government’s current two year budget cycle ends on June 30, 2013. Comparing estimated revenues for the current two year budget period, or biennium, to the upcoming biennium, which begins July 1, 2013 and ends June 30, 2015, taxable sales and purchases are expected to grow by just over 24 percent. Although that may sound like an aggressive growth assumption by most standards, current biennium sales tax revenues are running nearly 90 percent higher than in the previous budget period.

Rod Backman, CPA, CFP
Covenant Consulting Group

Go to the View Issues page and click on September 2012 to view a table showing a variety of economic measures at the state, local, and national level.

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