State loses 5,100 jobs; unemployment rate steady at 7.1%

Minnesota’s seasonally adjusted unemployment remained flat at 7.1 percent as employers shed 5,100 jobs in November, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED).

Minnesota’s unemployment rate remained well below the U.S. rate, which ticked up 0.2 of a point to 9.8 percent in November.

November job losses were partially offset by revised October figures that added another 1,900 jobs to the 14,100 job gains that were reported last month. So far this year, the state has added about 44,800 jobs, a growth rate of 1.7 percent, compared with a U.S. pace of 0.6 percent.

“While we had hoped for stronger employment growth last month, Minnesota has consistently outperformed the national economy over the past year,” said DEED Commissioner Dan McElroy. “Manufacturing, in particular, has been a bright spot, adding 12,900 jobs in the state in the past 12 months.”

Sectors that gained jobs in November were government (up 3,500), manufacturing (up 1,800) and professional and business services (up 1,500). The logging and mining sector was unchanged during the month.

Job losses occurred last month in leisure and hospitality (down 4,000), financial activities (down 2,900), trade, transportation and utilities (down 2,100), other services (down 1,400), education and health services (down 700), construction (down 600) and information (down 200).

Along with manufacturing, other sectors that have added jobs in the past year were education and health services (up 13,400), professional and business services (up 12,200), leisure and hospitality (up 10,300), trade, transportation and utilities (up 5,800), information (up 2,900), and logging and mining (up 500).

While pleased that the state’s unemployment rate remains well below the national rate, McElroy said in a conference call with reporters that Minnesota is “not adding jobs or reducing the unemployment rate fast enough” to reduce unemployment to pre-recession levels, which averaged 4.6 percent.

Steve Hine, research director for DEED’s labor market information office, noted that the current 1.7 percent annual growth rate in jobs is coming off the depths of the recession and will be difficult to sustain in 2011.  Only seven months since 2001 have posted annual growth rates greater than 1.7 percent.

Manufacturing is … a bright spot,” he added, describing job growth there as “broad and quite significant.”

DEED also announced the results of its annual survey of Minnesota manufacturers in November. The random sample survey found that state manufacturers had a much better year this year than in 2009.

More than one-half of those surveyed saw increased orders and production, and more than one-third hired new workers. More than one-half expect orders and production to increase again in 2011, and more than one-third plan to increase hiring in 2011. A full report on the study can be found here.

Hine pointed out that gains in government employment were driven by the hiring of 4,000 temporary election judges in November and a typical catch-up in local school hiring for the year. He said growth in year-over-year local school hiring was the largest in a decade, from admittedly low levels last year.

He also said that the decline in the leisure and hospitality sector was in large part the result of “technical issues” related to a change in measurement methods at the U.S. Bureau of Labor Statistics.

Nearly a quarter of a million Minnesotans age 16 and older have dropped out of the labor force since the recession began, McElroy said. The current labor force participation rate declined slightly to 71.6 percent and has dropped 1.2 percentage points since last April, even though the unemployment rate has also declined since then.

“It’s a bit perplexing, given the job gains, why we’re not seeing an improvement in labor force participation rates,” Hine added. While the state labor force participation rate is still above the national average of 64.5 percent, it has declined faster than the nation as a whole during the recent recession.

In trying to put a positive spin on the beleaguered construction industry numbers, which lost 600 jobs in the month, Hine said that the previous month’s preliminary decline of 2,300 jobs was revised upward to a loss of only 200 jobs.

Later today, the Federal Reserve Bank of Minneapolis will release its 2011 economic outlook for the Ninth Region, which includes Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan.

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