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This is the third annual summary of the Business Tracking System (BTS) from the Minnesota
<br /> Department of Trade and Economic Development. The annual summary presents business
<br /> activity data for third quarter 1994, through third quarter 1995. The third quarter is highlighted
<br /> • for annual comparison because seasonal employment changes are less severe during this
<br /> quarter in comparison to other quarters. The second part of this issue presents data for fourth
<br /> quarter 1995 only, which continues the quarterly series of BTS reports. Similar data for the
<br /> previous quarter and the corresponding quarter from one year ago are included for
<br /> comparison.
<br /> BTS provides important statistical evidence of the sources and dynamics of job creation in the I Minnesota
<br /> Minnesota economy. This edition of BTS shows that the soft landing of the national economy
<br /> during 1995 slowed new job creation by Minnesota businesses. Between third quarter 1994 Analysis'
<br /> and third quarter 1995, the national economy decelerated from an annual growth rate of 3.9
<br /> percent to 1.9 percent, and job growth moderated from 2.2 percent to 1.3 percent. Although 3rd Quarter, 1994
<br /> Minnesota's new job creation also turned sluggish toward spring of 1995, it recovered to an through
<br /> annual rate of 2.4 percent by early 1996, driven by renewed vigor of the national economy. 3rd Quarter, 1995
<br /> Small Businesses Created Most New Jobs
<br /> I
<br /> Compared to the vigorous 1993-94 period, Minnesota's economic activity slowed during the
<br /> period 1994-95, which reflected sharply curtailed business expansions among small companies
<br /> (less than 50 employees) and medium-sized companies (50 to 499 employees). Meanwhile,
<br /> small business start-ups and dissolutions improved significantly during this period. Newly
<br /> formed companies with less than 50 employees created 23 percent more new jobs than during
<br /> the previous year, and comprised two of every three start-up jobs in the state. Job losses from
<br /> small business dissolutions dropped by 11 percent from the previous period. During this
<br /> period, new and expanding small firms accounted for three out of every four net new jobs in
<br /> the state. Medium-size and large firms continued to downsize, cutting sharply their net new
<br /> hirings from the previous period. This supports the finding by the U.S. Small Business
<br /> Administration for Minnesota and the U.S., that "small firms with fewer than 20 employees
<br /> grew fastest from 1990-1994, generating a majority of new jobs." (U.S. Small Business
<br /> Administration, 1995 Small Business Profile, Minnesota, November 1995.)
<br /> Job Growth by Company Size,
<br /> (3rd Quarter 1994 through 3rd Quarter 1995)
<br /> Size of Company (No. of Employees)
<br /> Less than 50 50 to 99 100 to 499 500 or More Total
<br /> Number of Jobs 3rd Quarter 1995 725,886 217,634 547,216 724,913 2,215,649
<br /> Number of Jobs 3rd Quarter 1994 674,414 213,365 540,998 718,939 2,147,716
<br /> Percent of Total 31% 10% 25% 34% 100%
<br /> 1994-95 Changes 51,472 4,269 6,218 5,974 67,933
<br /> Percent of Total 76% 6% 9% 9% 100%
<br /> Business Births 32,525 3,552 4,595 8,451 49,123
<br /> Business Dissolutions (19,671) (3,183) (4,722) (2,449) (30,025)
<br /> Business Expansions 97,206 16,665 32,588 27,379 173,838
<br /> Business Contractions (58,588) (12,765) (26,243) (27,407) (125,003)
<br /> Note BTS totals are not adjusted for late or missing employer reports, but the job data is edited for data entry errors.
<br /> However, this data covers all expanding and contracting businesses in the state.
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