Industrial Analysis

by Jerry Brown
August 2011

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

Overview

Minnesota employment fell 19,800 on a seasonally adjusted basis over the past month. The loss came almost entirely from a decline of 28,000 in government where a state government shutdown accounted for most of the monthly loss. Employment gains were present in seven of the 11 supersectors, but these gains erased only a small portion of the government losses. Still, a gain of 8,200 for the month among private employers was a significant positive sign for the economy. The largest gains included the addition of 3,500 in manufacturing and 3,000 in professional and business services. Given the large monthly loss it is no surprise the rate of annual growth was substantially lower, falling from 1.4 percent in June (revised) to 0.5 percent. This decline should largely reverse itself as state government employment returns to normal levels. Besides the loss of 26,600 in government, three additional supersectors posted declines including construction, down 2,700, other services, down 1,300, and information, off by 900. The private sector overall showed a gain of 40,000 the past 12 months. The largest gains were in leisure and hospitality with an increase of 14,400 and educational and health services, up 12,900.

Mining and Logging

There was essentially no change in employment in mining and logging. The supersector showed an increase of 100 both over the month as well as over the past year.

Construction

Construction was one of four supersectors to show a monthly loss, down 2,000, as the supersector continued to show little evidence of sustained improvement. Over the past year, construction employment fell 2,700, equal to a loss of 2.8 percent. The annual decline came from heavy and civil engineering construction, down 1,700, and specialty trade contractors, off 1,500. Construction of buildings showed a small over-the-year gain to offset part of these losses.

Manufacturing

The largest monthly employment gain among the supersectors was the 3,500 jobs added in manufacturing during July. Most of this gain came in durable goods manufacturing where 2,600 jobs were added. The strongest monthly gains were in machinery manufacturing. The gain of 900 in nondurable goods manufacturing came from outside the industries for which estimates are available. Over the past year the supersector added 5,300 jobs of which 2,800 came from durable goods manufacturing. Fabricated metal and machinery manufacturing showed the strongest growth, up 1,100 and 1,200 respectively. Nondurable goods added 2,500 jobs with about 400 jobs gained in food manufacturing. Indications are that manufacturing growth has a good chance to continue in the next few months. The Minnesota Business Conditions index remained in positive territory in July at 57.5.

Trade, Transportation, and Utilities

There was little net change in trade, transportation, and utilities in July with estimates showing a seasonally adjusted monthly gain of only 200. All of this growth came in wholesale trade which added 900. This increase outweighed losses of 200 and 500 in retail trade and in transportation, warehousing, and utilities respectively. There were no real areas of strength in retail trade with slightly weaker results being the norm. Over the past 12 months the supersector showed a gain of 4,000. Transportation, warehousing, and utilities saw the largest increase adding 3,400 in transportation and warehousing. This, along with a gain of 1,800 in wholesale trade, easily erased a loss of 1,300 in retail trade. Within retail trade there were very large declines in motor vehicle and parts dealers and in building material and garden equipment and supplies dealers.

Information

Employment in information experienced a loss of 700 for the month. Over the last year the supersector showed a loss of 900, with a decline of 700 in traditional publishing industries.

Financial Activities

Financial activities showed a substantial 1,900 increase in employment that was evenly distributed between finance and insurance which added 900 and real estate and rental and leasing with a gain of 1,000. There was substantial strength in insurance carriers and credit intermediation. On an annual basis the supersector showed an increase of 400. This was the first month showing annual growth since July 2006. Nearly all of the yearly gain came from insurance carriers with an increase of 2,600. This gain was countered by large losses in real estate and rental and leasing and in securities, commodity contractors, and other related industries.

Professional and Business Services 

The professional and business services supersector showed a monthly gain of 3,000 in the seasonally adjusted estimates. Nearly all of this growth came in administrative and support services with an increase of 2,600, more than offsetting a loss of 1,000 in June. Management of companies saw an increase of 400.  Over the past 12 months the supersector showed a gain of 7,800. All three of the major component industries showed growth for the year. Annual gains came mainly from administrative and support services, particularly employment services where there was an increase of 5,600. Professional, scientific, and technical services showed growth of 1,400, largely from computer systems design which was up 700.  Finally, management of companies showed an annual gain of 1,200.

Educational and Health Services

Educational and health services added 1,300 in July, the fifth consecutive month of job growth for the supersector. As in June, most of the monthly gain came in private education with a gain of 900 as seasonal layoffs continue to be below expectations. Heath care and social assistance contributed a gain of 400.  Over the past year the supersector added 12,900 to post the second largest numerical gain among supersectors. All of the detailed industries outside of offices of dentists showed annual growth in July.  Ambulatory health care added the most jobs, up 4,800 over the year. Educational services also added a robust 3,700 jobs as employment at colleges and universities was much stronger. Nursing and residential care was up over 3,300 jobs. Social assistance posted a gain of 200 over the past year, the first annual gain posted in 12 months.

Leisure and Hospitality

There was essentially no change in leisure and hospitality employment with a monthly loss of 100 posted in July. Accommodation and food services employment increased 500 for the month, mainly from full-service restaurants. This gain was erased by a loss of 600 in arts, entertainment, and recreation.  The supersector showed the largest number of jobs added over the past 12 months, posting a gain of 14,400, equal to 5.8 percent. Accommodation and food services accounted for most of the increase, adding 13,100 for the year. Accommodation showed very strong growth in adding 5,000 jobs as did limited-service eating places, up nearly 5,400 jobs. Arts, entertainment, and recreation posted an annual gain for a second consecutive month. This marked the first incidence of consecutive months of growth since January 2009.

Other Services

Other services added 1,000 jobs in July. Most of the gain came in personal and laundry services, but the other sectors were slightly higher as well. On an annual basis the supersector showed a loss of 1,300, equal to 1.1 percent. Nearly all the decline occurred in religious, grantmaking, civic, professional, and similar organizations which has seen a reversal from over-the-year gains of 1.9 percent posted as recently as October 2010.

Government

The main employment story for July was the loss of 28,000 jobs in government over the past month.  State government showed a loss of 23,400 for the month. Nearly all this loss was caused by a three-week shutdown of non-education units of state government that occurred because a new state budget was enacted 20 days after the end of the previous fiscal year. Local government also lost 4,600 jobs for the month entirely from losses in local government educational services. The annual decline of 26,600 saw reductions in all three of the major component industries. The state shutdown caused annual losses to climb to 22,400 in state government. Annual losses in local government education totaled 3,500 in July, which erased an increase of 2,900 in non-education units of local government for a net loss of 500 overall in local government. Finally, federal government employment was down 3,700 compared to last year.      

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