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Minnesota loses jobs as unemployment rate inches down to 7 percent

The state lost 22,400 jobs in December, while the unemployment rate ticked down 0.1 of a percentage point to end the year at 7 percent, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED).

The decline in payroll employment, based on a sample of 4,500 employers, was driven in part by declines in temporary election workers and college students, according to DEED .

The unemployment rate, based on a separate survey of 1,700 Minnesota households, still showed the state unemployment rate well below the U.S. rate for December, which stood at 9.4 percent.

The drop in employment, accompanied by a drop in the unemployment rate, can seem “counter-intuitive” in any given month, said Steve Hine, DEED director of labor market information research, in a conference call this morning.

“Over the longer term, you should see them line up,” he added pointing out that for the three months since October, the unemployment rate held steady and job growth was minimal.

The job losses reduced the state’s over-the-year job gains to 29,300, or a growth rate of 1.1 percent. U.S. job growth over the past year was 0.8 percent.

In November, Minnesota had posted the third-highest job growth rate at 1.8 percent and had been adding jobs at about twice the U.S. rate.

“I hoped the national job rate would move toward us rather than we move to them,” Hine said.

DEED revised the November job losses from 5,100 down to 1,400 and cautioned that the December numbers are subject to a major “annual benchmark” revision that “can change these numbers quite significantly,” Hine said.

In the report issued this morning, mining and logging was the only industrial sector to gain jobs last month, adding 200 positions.

Job losses occurred in government (down 5,300), trade, transportation and utilities (down 4,200), professional and business services (down 3,500), education and health services (down 3,000), leisure and hospitality (down 1,800), manufacturing (down 1,800), construction (down 1,700), financial activities (down 800), other services (down 300) and information (down 200).

On a positive note, Hine pointed out that initial claims for unemployment fell by more than 5,000 to 24,425. That marks the first time since the recession began that initial claims are below 25,000, which, in the previous two decades, had a high correlation with positive job growth, Hine added.

He also pointed to continued job growth in the manufacturing sector as a hopeful sign.

“While the labor market remains unpredictable, we are seeing other signs of steady improvement,” said Paul A. Moe, acting commissioner at DEED in a prepared release. “The state has recovered about 20 percent of the jobs that were lost in the recession. Temp hiring is up and new claims for unemployment benefits are down.”

Over the past year, the following sectors have added jobs: manufacturing (up 10,700) education and health services (up 9,800), leisure and hospitality (up 9,600), professional and business services (up 8,300), trade, transportation and utilities (up 4,300), information (up 2,800), and logging and mining (up 600).

Over-the-year job losses occurred in government (down 7,000), construction (down 4,700), financial activities (down 2,700) and other services (down 2,300).

In the state Metropolitan Statistical Areas, job gains occurred in the past year in the Rochester MSA (up 1.3 percent), Minneapolis-St. Paul MSA (up 1.2 percent), Duluth-Superior MSA (up 1 percent) and Mankato MSA (up 1 percent). The St. Cloud MSA declined 0.4 percent.

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