October unemployment rate edges up, even as state gains 14,100 jobs

Minnesota’s seasonally adjusted unemployment rate inched up to 7.1 percent even as employers added 14,100 jobs.

The state’s jobless rate rose from 7 percent in September but remains well below the U.S. rate, which held steady at 9.6 percent in October.

Over the past 12 months, Minnesota has gained 42,100 jobs at a growth rate of 1.6 percent, according to figures released today by the Minnesota Department of Employment and Economic Development. This figure includes a revision to September’s job count, when 4,200 jobs were lost instead of the 9,900 that were initially reported.

“Minnesota employers have added jobs at triple the pace of the U.S. rate in the past year, and lead the national rate of growth in eight of 11 industry sectors,” said DEED Commissioner Dan McElroy. “I am encouraged by these signs indicating that Minnesota is recovering from the economic downturn.”

In a conference call with reporters, DEED officials downplayed the 0.1 point rise in the unemployment rate, which is calculated from a door-to-door survey of 2000 households. Instead, they pointed to the job growth numbers based on a payroll survey of 4,500 employers as more statistically valid. In addition, they pointed to growth on online job postings at DEED as an indication that the demand for employment is improving around the state.

“I don’t want to discount the unemployment data entirely,” said Steve Hine, DEED director of research, “but I would place my bets on the payroll survey.”

Officials also downplayed the drop in manufacturing employment in October, pointing out that for the first time in a decade, construction employment is up year to date from a year ago. After a string of monthly growth “we may occasionally see a step backwards, I wouldn’t be too concerned,” Hine said.

They were less sanguine about the construction sector, which has lost nearly 50,000 jobs in the state since employment peaked in early 2006.  “I was really hopeful the mild weather we had in October might result in another gain,” Hine said, but the drop reinforces the fact that “construction just continues to struggle … We’re not out of the woods yet.”

In one hopeful sign, McElroy cited several industrial and public works projects in the pipeline around the state as well as an uptick in a national index for architectural billings, which is a leading indicator on construction projects six to nine months in the future.

 “But we see nothing in commercial or residential construction,” he added.

Professional and business services led all sectors in October, adding 6,500 jobs. Other gains occurred in transportation and utilities (up 3,900), other services (up 2,900), leisure and hospitality (up 2,300), education and health services (up 2,000), government (up 500), financial activities (up 300), mining and logging (up 200), and information (up 100).

Employment in the temporary help sector, a leading indicator, continues to grow and has returned to pre-recession levels.

The hard-hit construction and manufacturing sectors each lost 2,300 jobs in October after posting gains in September.

Separately, the U.S. Bureau of Labor Statistics reported this morning that about 1 in 25 persons who were in the labor force in October 2010 had been unemployed for 27 weeks or more, accounting for 4.0 percent of the labor force, off an all-time high of 4.4 percent in May and June.

The recession that began in December 2007 led to the highest unemployment rates in almost three decades, along with record-breaking rates of long-term unemployment, the BLS reported.  “Almost 3 years after the onset of the recession, the unemployment rate remains high, at 9.6 percent, with the long-term unemployed accounting for 41.8 percent of the unemployed.”

Long-term unemployment rate, January 1979-October 2010

Long-term unemployment rate, January 1979-October 2010
Source: U.S. Bureau of Labor Statistics

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