Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
April 2009

Note: Except for the Minnesota Labor Market Index, the U.S. Labor Market Index, and the PMI, all over-the-year data are seasonally unadjusted. The most recent data available are for February 2009. 

Minnesota Labor Market Index

The Minnesota Labor Market Index renewed its nose dive in February after temporarily easing up in January. All three components deteriorated in February as the state’s businesses scrambled to adjust to what now looks to be the most serious recession in three generations. Seasonally adjusted wage and salary employment and adjusted weekly manufacturing hours sank, while adjusted initial claims for unemployment benefits rose. The index’s February 4.6 percent drop was the second steepest drop exceeded only by last November’s 5.9 percent.

United States Labor Market Index

The national index fell for the 15th straight month declining 3.6 percent. The Minnesota index is down 16.8 percent from a year ago, a 39-year record over-the-year drop. The national index is off 18.1 percent over the year, which is also a record low. Both the state and national economies are caught up in a self-reinforcing downward cycle that seems likely to continue through the summer.

Wage and Salary Employment

Minnesota’s seasonally adjusted Wage and Salary Employment declined for the sixth straight month in February slipping 0.3 percent. The loss of 7,500 jobs in February was the lowest monthly decline since last October. Goods-producing employment fell for the 15th straight month while service-providing employment shrank for the sixth consecutive month. Seven supersectors reported job cuts with professional and business services, manufacturing, and trade, transportation, and utilities trimming payrolls the most. Three supersectors boosted employment in February with government and educational and health services leading the job creators.

February’s 3 percent unadjusted over-the-year job loss moves Minnesota’s labor market into distressing territory. Since 1950 the state has endured just eight months with over-the-year job loss of 3 percent or more. In other words, job loss at this level has occurred only 1.1 percent of the time over the last 60 years.

Help-Wanted Advertising

Adjusted Help-Wanted Ads in newspapers continued to rack up record lows declining 2.6 percent in February to 1,030. The 74.5 percent over-the-year plunge in printed help-wanted ads reflects more on newspapers’ shrinking share of job recruitment activities than the weak demand for new workers. After three months of double-digit declines, Minnesota’s seasonally adjusted online help-wanted ads, as reported by the Conference Board, Inc., showed some signs of life by climbing 2.1 percent. The corresponding national measure was down 0.2 percent. Monster Worldwide, Inc., on the other hand, reports that February’s unadjusted index of online help-wanted ads for the Twin Cities area was down 39 percent from a year ago while the national ad index was down 26.1 percent.

Purchasing Managers' Index

Minnesota’s Purchasing Managers’ Index (PMI) fell for the seventh straight month dropping to a record low of 28.4. An upturn in the PMI would allow for green shoots or glimmers of hope for Minnesota since the index is a leading economic indicator. As of February the PMI was moving in the wrong direction. The state’s labor market is unlikely to show any improvement until three or four months after the PMI reverses directions.

Average Weekly Manufacturing Hours

Adjusted weekly Manufacturing Hours stumbled in February for the seventh straight month, sliding to another record low of 37.9 hours. Minnesota’s manufacturers are battered not only by a severe national recession but also by a worldwide drop in international trade. Factory hours plunged by 7.1 percent since February 2008, which is another record low surpassing the 5.2 percent over-the-year decline experienced in April 1974.

Manufacturing Earnings

Adjusted weekly Manufacturing Earnings took a big hit in February diving to $686.97. Factory paychecks haven’t been this skinny since December 2003. After adjusting for inflation, manufacturing workers’ paychecks have shrunk 3.3 percent since February 2008.

Business Incorporations

After climbing for five months in a row, adjusted Business Incorporations reversed directions tumbling 15.7 percent in February but were still 5.2 percent higher than a year ago. Limited liability registrations also were up from last year by 78 percent as the state’s new independent contractor certification requirement continues to motivate independent contractors to register as limited liability companies.

Residential Building Permits

Seasonally adjusted Residential Building Permits slipped slightly in February declining 13.8 percent to 1,341. Despite February’s drop, home-building permit numbers are still 15.1 percent higher than a year ago. Home-building activity may have finally reached bottom over the last few months, but any sustained recovery will have to wait until this recession ends.

Initial UB Claimants

After offering a ray of hope by decreasing in January, adjusted Initial Claims for Unemployment Benefits reversed directions in February jumping 8.8 percent to a record high of 9,408. Unadjusted initial claims have almost doubled from one year ago, increasing 94.2 percent since February 2008.