Industrial Analysis

by Jerry Brown - jerry.brown@state.mn.us 
August 2009

Monthly analysis is based on seasonally adjusted employment data.
Yearly analysis is based on unadjusted employment data.*

Overview

July employment estimates showed a strong surge in employment with the addition of 10,300 jobs. This was the first month of job growth for the state since August 2008. The gain was fairly well distributed with eight of 11 supersectors showing growth. The two largest gains came in leisure and hospitality and in government, which added 3,900 and 2,800 jobs respectively. Manufacturing and professional and business services showed increases of 1,700, and educational and health services added 1,200 jobs. There was only one notable loss for the month, which came in trade, transportation, and utilities. On an annual basis, employment showed a decline of 3.7 percent representing an improvement from the loss of 4.1 percent registered in June (revised). Nine of 11 supersectors registered a decline with the largest of these a loss of 38,900 in manufacturing followed by a decline of 31,900 in professional and business services, 20,600 in trade, transportation, and utilities, and 17,000 in construction. Educational and health services and government were the only supersectors showing over-the-year growth.

Mining and Logging

July brought the first employment gain in mining and logging since July 2008 with the addition of 200 jobs on a seasonally adjusted basis. This small increase comes on the heels of several months of sizeable declines caused mostly by layoffs at iron mines. The impact of the recent declines becomes even more apparent when comparing current employment to year-ago data. By this measure employment was down 2,200, equal to a loss of 32.2 percent.

Construction

Construction employment increased by 700 jobs over the past month after a rather large decline was posted in June. The past three months experienced one large decline and two sizeable increases. This is an improvement compared to the 23 consecutive months without a gain that took place from April 2007 through April 2009. Compared to last year, employment was down 17,000 to 106,800. It seems that the rate of annual decline may have peaked in March at -19.9 percent assuming the declines occurring in commercial construction do not lead to another major acceleration of job declines. One area that had better-than-expected employment growth was building equipment contractors. This may indicate increased business from incentives for installing energy-saving heating units, air conditioners, windows, insulation, and the like.

Manufacturing

Manufacturing employment showed an increase for the first time since February 2008. This was the first time both durable- and nondurable-goods manufacturing increased in the same month since June 2006. The larger part of the gains came in nondurable-goods manufacturing particularly food manufacturing. Durable goods experienced strength in wood product, fabricated metal, and machine shops. One positive month, however, did little to alleviate the effects of a long decline. Manufacturing still showed a decline of 38,900 compared to last year with 77 percent of the loss in durable-goods manufacturing.

Trade, Transportation, and Utilities (TTU)

The largest monthly loss came in trade, transportation, and utilities as losses in transportation, warehousing, and utilities and in retail trade outweighed a small gain in wholesale trade causing a net loss of 1,300 for the supersector. Retail trade employment fell by 700 for the month as retail spending, not including automobiles, was down for the month. Employment in general merchandise, gas stations, and motor vehicles were all somewhat weaker in Minnesota. Monthly losses in transportation and warehousing equaled 1,100 with the majority of these coming from outside the trucking industry. Losses in transportation, warehousing, and utilities have averaged 900 per month thus far in 2009. Over the past year the supersector is down 3.9 percent. Of the 20,600 jobs lost, about 8,200 were in transportation, warehousing, and utilities — equal to a loss of 10.5 percent. The loss in retail was numerically large at 5,500, but at 1.9 percent, the rate of loss was substantially below the two other major supersector components. Census Bureau estimates showed July retail sales declining 9.4 percent compared to a year ago.

Information

Information fell by 500 over the month of July, the sixth consecutive monthly loss. There seems to be no signs that the trend of gradual decline will come to an end any time soon. Over the past 12 months the supersector has lost 3,000 jobs.

Financial Activities

For the third month running there was very little change in financial activities employment, up only an estimated 100 jobs. The data showed a small gain in real estate and rental and leasing that slightly outweighed losses in finance and insurance. Compared to the previous year, employment was down 2 percent. About 55 percent of the numeric losses was in real estate and rental and leasing, but the percentage decline was 5.3 percent compared to 1.1 percent in finance and insurance.

Professional and Business Services (PBS)

One of the larger gains for the month was in professional and business services which added 1,700 jobs in July. This is the strongest gain in more than three years and is the first gain since an increase of 200 in May 2008. All three of the major components added jobs but most of the gain came in professional and technical services, which added 1,100 jobs. The employment gain was not centered in any particular detailed industry. On an annual basis the supersector was down 9.6 percent, equal to 31,900 jobs. The majority of the decline was in administrative and support services, down 18,700 jobs, with somewhat more than half of this loss in employment services.

Educational and Health Services

A very strong gain in health care and social welfare, which added 2,700 jobs, offset losses in educational services yielding a net monthly supersector gain of 1,200. There was a major improvement in social assistance and ambulatory health care services during the month. Educational and health services remained the only private-sector supersector that shows job growth over the past year. In July annual growth measured 13,600 with all of this gain in health care and social services. Social assistance continues to post very strong annual growth at 7.5 percent continuing a long trend. Nursing and residential care grew at a 3.9 percent rate, with most of the gain coming outside of nursing homes.

Leisure and Hospitality

A major boost in employment in accommodation and food services, in particular eating and drinking places, provided 3,400 of the 3,900 jobs added in leisure and hospitality in July. Limited-service eating places has been an area of strength, although in July full service restaurants showed good results as well. Over the past year the supersector showed a loss of about 600. The loss came from arts, entertainment, and recreation, which was down about 1,100, and in accommodation, down about 1,000. These combined to offset gains of nearly 1,500 in food services and drinking places and, in particular, gains in limited-service eating places.

Other Services

Other services showed another small decline for the month, down 200 jobs. Over the past year the supersector has lost nearly 3,900 jobs. All component industries showed substantial losses over the past year.

Government

The second largest monthly gain came in government, which added 2,800 jobs. Local government units added 2,200 of these jobs with essentially all the additions coming in non-educational local government units. Over the past year the supersector added 6,000 jobs. Local government accounted for more than 5,600 of the additions and state government about 100.

* Over-the-year data are not seasonally adjusted because of small changes in seasonal adjustment factors from year to year. Also, there is no seasonality in over-the-year changes.