The US Bureau of Economic Analysis released its Q1 Personal Income report on June 21, 2018. The report showed signs that the South Dakota economy may be turning around. Personal Income, which includes wage, business, and investment income, grew by 4.9% between Q4 2017 and Q1 2018. South Dakota ranked 20th in the nation as a result.
Net earnings (i.e. the portion of personal income derived from wage and salary earnings) also rose by 5.7% from Q4 2017 to Q1 2018 versus only 4.7% for the nation overall. Growth in net earnings is typically a sign of a healthy labor market where either more people are working, wages are rising, or some combination of both.
The report also hints that the Ag sector may be turning around after significant declines in 2017. Personal income in the Farm sector grew by 0.28% percentage points, or $29 million during Q1 2018. Farm sector personal income growth in the South Dakota was 4th in the nation, trailing behind only Vermont, Wyoming, and North Dakota, where farm incomes grew by 0.96%, 0.63%, and 0.42%respectively.
Other signs of an improving economy were seen in strong personal income growth in the Construction, Durable goods manufacturing, and Health care industries whose rates of personal income growth were 0.44%, 0.40% and 0.57% respectively.
The performance of the construction and durable goods manufacturing industries are often considered leading indicators of economic performance, but their performance can also be volatile and highly sensitive to macroeconomic conditions and market confidence. Trade frictions between the United States and its trading partners could slow these sectors in the near to medium turn. The Ag sector could face similar headwinds in the future as well. In light of these considerations, it may be necessary to temper expectations of such strong performance in Q2 2018.