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INDICATORS

Third Quarter 2013

PUBLISHED BY NORTHERN STATE UNIVERSITY SCHOOL OF BUSINESS

Employment (SA)

vs. pr. quarter vs. prior year

New Entity Filings

vs. pr. quarter vs. prior year

Personal Income

vs. pr. Quarter vs. prior year

Unemployment

vs. pr. quarter vs. prior year

Business Filing advance in Q3 2013. New entity filings, trademarks, and enti-ties in good standing all expanded in the third quarter, 2013. South Dakota en-tites grew by over 7,400 over the last 12 months. However, total new entity fil-ings fell by 306 from the quarter ending in June.

Q3 2013 records lowest three-month average unemployment rate since 2008. Continuing strength in new entity filings are suggestive of an improving job mar-ket in South Dakota. For the three months ending on August 31st (latest data available), South Dakota’s unem-ployment rate averaged 4.0%, the lowest rate since the three month period ending in December 2008 at 3.5%. South Dako-ta’s lowest 10 year average quarterly unemployment rates was recorded in Q1 2008 at 2.7%.

National and Local Economies Showing Signs of Growth and Strength. Lower interest rates, lower gasoline rates, high-er home values, decreasing unemploy-ment, and an increasing stock market have all improved local and national eco-nomic sentiment.

Still, there is pause….. The small growth in real wages and personal income, the “shadow” housing market, creeping in-flation, and the Federal Reserve’s pend-ing discontinuation of Quantitative Eas-ing all serve to temper the positive signs nationally. Locally, declining grain prices could potentially damper growth in 2014.

Politics interrupting the economy? Se-questration, continuing resolution, debt ceiling—all words that Americans have grown sick of in Q3; South Dakotans add “lack of a farm bill” to their list of politi-cal woes. In January, the next round of the battle begins.

Signs of Strength for Q3

Note: Red line displays actual seasonally adjusted employment numbers. Source: Seasonally adjusted South Dakota

total nonfarm employees from the Bureau of Labor Statistics and the Labor Market Information Center, SD Department

of Labor.

Q3 2013 vs. Q2 2013

Q3 2013 vs. Q3 2012

Q4 2013 vs. Q4 2012

EMPLOYMENT FORECASTS

South Dakota Secretary of State

QUARTERLY BUSINESS & ECONOMIC INDICATORS

Jason M. Gant

South Dakota Secretary of State

State Capitol

500 East Capitol Avenue

Pierre, SD 57501-5070

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South Dakota Secretary of State QUARTERLY BUSINESS & ECONOMIC INDICATORS Q3 2013

Although the disaster technically happened in Quarter 4, all of the other stats and facts in this report pale in comparison to the tragedy experienced by our western South Dakota cattle pro-ducers in October. Historic by meteorological standards, devastating by human standards, the early snow storm cost some of our ranchers their entire production for the year, and in some circumstances, may likely end what was generations of cattle production. When reading through piles of economic statistics, one can often forget that in the end, each of these data points actually reflect the daily lives of people. Typically, I intend to use this spotlight to provide technical support and advice to the public on various items of topical interest. With the disaster in mind, however, I would simply like to express my heartfelt condolences to the folks that are suffering in western South Dakota and let you know my thoughts and prayers are with you and your families.

Secretary’s Minute

Q3 2013 Q2 2013 Q3 2012

Percent Change over

Prior Year

5 Year

CAGR*

New Entity Filings

Domestic Limited Liability Company 868 1,119 887 -2.1% 8.5%

Domestic Nonprofit Corporation 77 64 71 8.5% 1.1%

Domestic Business Corporation 160 204 183 -12.6% -1.8%

Other Entity Types 443 467 436 1.6% -5.3%

Total New Entity Filings 1,548 1,854 1,577 -1.8% 4.0%

Total New Entity Filings-12 mo. trailing 7,401 7,430 6,709 10.3% 4.3%

Other Business Filings

Trademarks 120 109 182 -34.1% - -

Trademarks-12 mo. trailing 424 486 418 1.4% - -

Trade Names 797 937 852 -6.5% 2.2%

Trade Names-12 mo. trailing 3,313 3,368 3,316 -0.1% 2.7%

* Compound Annual Growth Rate

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South Dakota Secretary of State QUARTERLY BUSINESS & ECONOMIC INDICATORS Q3 2013

Entities in Good Standing,

Trademark & Trade Name Filings

Limited Liability Companies make up 42% of entities in good standing. An entity must file paperwork each year to ensure they remain in good standing. At the end of Q3, 2013, 57,499 entities are in good standing with the Secretary of State’s office.

Trademark filings grew in Q3 2013. Safe-guarding the symbols and words that an entity employs in commerce, trademark filings numbered 120 in Q3, 2013, a 10% increase over the prior quarter. Trademark filings for the 12 months ending Q3, 2013 totaled 424, which was 1.4% higher than the previous year’s number.

Trade name filings contracted in Q3 2013. Entities must file a statement of trade name when operating under any name oth-er than their true name. The South Dakota Secretary of State received 797 trade name filings in Q3, a decrease of 14.9% over the prior quarter.

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South Dakota Secretary of State QUARTERLY BUSINESS & ECONOMIC INDICATORS Q3 2013

South Dakota Economic Indicators

South Dakota’s economic indicators point to a healthy economy, with the unemployment rate hitting the lowest quarterly unemployment rate since the Great Recession. Tourism and manufacturing both showed signs of positive upticks in Q3. Two primary forces dominated the discus-sion of South Dakota Economics during the third quarter- the lack of a comprehensive Ag bill and crop prices. After hitting record prices a year ago, crop prices definitely hit a bear market on better than expected yields. According to the USDA, 18 states will report record yields in 2013. On average, corn prices were down 43% versus 2012. Soy-bean prices suffered over 18% declines during the same period. However, as with many crop-producing states, production grew substantially with corn growing by 52% and soybeans growing 26%. The net effect was an overall net loss to South Dakota’s Ag economy. Individual pro-ducer management of inventories and marketing will have the ultimate say in the net effect to South Dakota in Q4 2013 and into 2014.

SOUTH DAKOTA Current Period

3 Months

Prior

Percent Change

over Prior Period

Annual Percent

Change

5 Year

CAGR*

Wealth

Personal Income (millions of dollars) 39,368 39,435 -0.2% 3.5% 4.0%

Retail Sales, 12 mo. trailing (millions of dollars) 26,817 26,646 0.6% -7.5% 3.8%

Taxable Sales, 12 mo. trailing (millions of dollars) 10,257 10,127 1.3% 4.1% 3.5%

Business Outlays

Annual Wages per Employee 9,222 9,733 -5.3% 0.9% 2.3%

Retail Gasoline Price (dollars per gallon) 3.40 3.44 -1.2% -11.0% -1.4%

Economic Overview

Employment (in thousands) 419,000 418,733 0.1% 1.1% 0.4%

Unemployment Rate 4.0% 4.3% -7.0% -9.1% - -

Initial Jobless Claims 234 268 -12.7% -11.4% -2.5%

Continuing Jobless Claims 1,322 1,722 -23.2% -18.8% 0.7%

Building Permits, Number of Units, 12 mo. trailing 5,323 5,099 4.4% 50.6% 3.6%

Valuation (thousands of dollars), 12 mo. trailing 715,583 702,401 1.9% 32.6% 2.6%

FHFA Purchase-Only Home Price Index 237 235 0.6% 3.3% 1.1%

Total Business Bankruptcy Filings 13 17 -23.5% -27.8% -12.9%

Chapter 7 8 10 -20.0% -38.5% -16.7%

Chapter 11 - 1 -100.0% 0.0% 0.0%

Chapter 13 2 5 -60.0% -50.0% -19.7%

Sources: Bureau of Economic Analysis, Quarterly Personal Income (SA)(Q2/13); South Dakota Department of Revenue (NSA) (8/13); South Dakota Department of Labor and

Regulation (SA) (Q1/13); US Energy Information Administration, Weekly Retail Gasoline and Diesel Prices, M idwest (9/30/13); Bureau of Labor Statistics, CES (SA) (6/13); US

Department of Labor, Employment and Training Administration (NSA) (9/28/13); Census Bureau, New Privately Owned Housing Units Authorized (NSA) (8/13); FHFA Purchase-

Only Home Price Index (SA) (Q2/13); Administrative Office of the US Courts (Q2/13). *Compound Annual Growth Rate.

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South Dakota Secretary of State QUARTERLY BUSINESS & ECONOMIC INDICATORS Q3 2013

The Quarterly Business & Economic Indicators, produced by Northern State University on behalf of the South Dakota Secretary of State, in conjunction with MacKenzie Madison Analytics, reports on the correlations between various business filing data and economic metrics. The Labor Market In-formation Center of the South Dakota Department of Labor and Regulation is a contributing partner of the Quarterly Business & Economic Indicators report.

Nationally, the economy is showing signs of strength. Year to date, the S&P 500 is up close to 18%. For the quarter ended Sep-tember 30th, it stayed on track, growing a little over 4% for the quarter. With two exceptions, retail and personal income, most economic indicators followed the trend of 2013 and ended up for the Quarter 3. The underlying discussion behind these positive signs has been the lack of comparative impact to the massive cash injections the Federal Reserve has made into the economy. Since 2009, the Fed has purchased over $2.4 trillion in bonds in an effort to jumpstart growth. While there have been positive impacts, the primary objective of the infusion, full employment, has not been achieved. Uncertainty with the taxes, health care costs, a recent recovery of the European economy, political instability at home, the lingering effect of the Great Recession, as well as the poten-tially volatile impact of the tapering of Quantitative Easing itself has led corporations to preserve liquid balance sheets, rather than invest in human and other capital. The net effect has been gener-ally positive economic indicators, but lackluster growth in real income and wages.

National Economic Indicators

% change over prior quarter

Sources: Yahoo Finance and Bureau of Labor Statistics

NATIONAL Current Period

3 Months

Prior

Percent Change

over Prior Period

Annual Percent

Change

5 Year

CAGR*

Wealth

Personal Income (billions of dollars) 14,006 13,873 1.0% 2.7% 2.3%

Retail Sales, 12 mo. trailing (billions of dollars) 4,107.9 4,415.2 -7.0% -4.0% 0.3%

S&P 500 1,681.6 1,606.3 4.7% 16.7% 7.6%

Business Outlays

Annual Wages per Employee 12,855 13,006 -1.2% 0.6% 1.8%

Consumer Price Index 233.9 232.9 0.4% 1.2% 1.3%

Energy 247.8 245.9 0.8% -3.2% -1.0%

Transportation Services 280.2 279.3 0.3% 2.4% 2.5%

Retail Gasoline Price (dollars per gallon) 3.50 3.57 -2.0% -9.6% -1.1%

Economic Overview

Real Gross Domestic Output (billions of chained 2009 dollars) 15,680 15,584 0.6% 1.6% - -

Employment (in thousands) 135,687 135,108 0.4% 1.6% -0.3%

Unemployment Rate 7.5% 7.7% -2.6% -8.5% - -

Initial Jobless Claims 308,000 348,000 -11.5% -16.3% -8.6%

Continuing Jobless Claims 2,902,000 2,953,000 -1.7% -11.3% -4.3%

Building Permits, Number of Units, 12 mo. trailing 935,400 908,000 3.0% 24.5% -2.5%

Valuation (millions of dollars), 12 mo. trailing 164,086 156,863 4.6% 29.9% -0.8%

FHFA Home Price Index 198.8 194.7 2.1% 7.2% -0.9%

Total Business Bankruptcy Filings 8,874 8,512 4.3% -14.5% -1.9%

Chapter 7 5,989 5,703 5.0% -16.2% -3.2%

Chapter 11 2,028 1,990 1.9% -8.9% 4.1%

Chapter 13 728 689 5.7% -12.9% -5.0%

Sources: Bureau of Economic Analysis, Quarterly Personal Income (SA)(Q2/13); US Census Bureau (NSA) (8/13); Yahoo Finance (9/30/13); Bureau of Labor Statistics, QCEW (NSA)

(Q1/13); Bureau of Labor Statistics, All Urban Consumers, US City Average (SA) (9/13); US Energy Information Administration, Weekly Retail Gasoline and Diesel Prices (9/30/13);

Bureau of Economic Analysis (SA) (Q2/13); Bureau of Labor Statistics, CES (SA) (6/13); US Department of Labor, Employment and Training Administration (SA) (9/28/13); Census

Bureau, New Privately Owned Housing Units Authorized (NSA) (8/13); FHFA Purchase-Only Home Price Index (SA) (Q2/13); Administrative Office of the US Courts (Q2/13).

*Compound Annual Growth Rate.