Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
August 2010

Note:  All data except for the PMI has been seasonally adjusted.   All  indicators are current through July. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.

The Minnesota Index climbed for the 10th consecutive month rising by 0.4 percent in July. Minnesota’s economy is showing fewer signs of a slowdown than the national economy at least through July. The U.S. index has stalled over the last two months reflecting the declining pace of economic expansion in other parts of the country during the second quarter. Minnesota’s index is up 2.9 percent from a year ago while the U.S. index is up only 1.2 percent over the year. Minnesota’s 2.9 percent jump is the largest over-the-year increase since May 2006 and ranks seventh among all the states, trailing North Dakota, Michigan, New Hampshire, Indiana, Ohio, and Massachusetts.

Minnesota’s seasonally adjusted Wage and Salary Employment ramped up in July as the state’s employers added 9,800 jobs. All supersectors except the government sector added jobs. Government jobs at all levels were trimmed in July reducing public sector employment by 9,100 jobs. The private sector expanded employment for the fourth straight month adding 18,900 jobs, the largest private hiring uptick since April 2005. Payroll numbers increased the most in educational and health services, professional and business services, leisure and hospitality, and other services.

Over-the-year job growth on an unadjusted basis spiked to 1.1 percent in July, the highest annual job growth in over four years and noticeably more upbeat than the unchanged job picture recorded nationally. Minnesota’s over-the-year job growth hasn’t outpaced national growth by this wide a margin since March 1993. Minnesota’s over-the-year job growth exceeded the national rate 71 percent of the time during the 1990s but slipped to outpacing national job growth only 43 percent of the time during the 2000 through 2009 period. The state is “batting a thousand” so far in the 2010s decade, outperforming national job growth over the first seven months of 2010 when viewed on an unadjusted over-the-year basis.

Adjusted Business Incorporations remained essentially unchanged in July continuing a year-long trend. The more popular method for business registration, limited liability registration, dropped below 2,000 registrations for the first time since January.

Minnesota’s Purchasing Managers’ Index (PMI) slipped slightly in July but continues to indicate economic expansion over the next few months. The index has now been above growth neutral for a year, after dropping below 50 during the previous 12 months when the recession intensified. Minnesota’s PMI has been running ahead of the national index since February with Minnesota’s July 64.4 reading easily outpacing the national 55.5 reading.

Seasonally adjusted Residential Building Permits, after plunging in June to a near record low, recovered a bit in July climbing 30.1 percent. But July’s bump from such a low level just kept permit volume bouncing along the bottom. Minnesota’s home building boom started to unravel in 2005 and continued to crash until bottoming out in mid-2009. A rebound in home building looked to be under way during the first half of the year, but such hopes now look to be premature.

Adjusted weekly Manufacturing Hours retreated 1 percent in July, recording the biggest monthly decline since last May and keeping the factory workweek significantly below pre-recession levels. A few more months of waning manufacturing hours would add up to a troubling string of data points hinting at a slowdown in Minnesota’s manufacturing rebound.

Adjusted weekly Manufacturing Earnings declined for the third-straight month slipping to $760.83, the smallest factory paycheck since February. Manufacturing earnings, however, continue to be higher than a year ago, but the 4.1 percent over-the-year increase is the smallest gain in six months.

Adjusted online Help-Wanted Ads resumed an upward trend in July climbing 9.3 percent while advancing 3.4 percent nationally. Minnesota’s volume of help-wanted ads is up 47.2 percent from a year ago compared to 30.9 percent nationally, which is consistent with Minnesota’s job picture being brighter than the national job picture.

The direction of Adjusted Initial Claims for Unemployment Benefits, after being hailed as the most upbeat indicator in June, turns out to be the most troubling indicator in July after revisions to June’s numbers show initial claims on a three-month uptick. July’s 4 percent increase in initial claims pushed claim numbers to their highest level since last November. July’s 32,017 initial claim total is significantly higher than the 23,223 monthly average experienced before the recession during 2007 and 2006.

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