Industrial Analysis

By Jerry Brown- jerry.brown@state.mn.us
December 2009

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

Overview

Minnesota experienced a second consecutive month of job growth in November, adding 2,000 jobs over the month. This was the first back-to-back monthly increases since January and February 2008. The largest monthly gains came in trade, transportation, and utilities; professional and business services; and construction. Major losses occurred in government, educational and health care services, and information. The over-the-year rate of growth dropped precipitously, falling from -3.9 percent (revised) in October to -3 percent in November. While the monthly estimates showed some increase, most of the improvement is because November of last year proved to be the first of a string of really large monthly declines. Hence, in coming months our rate of annual loss will improve dramatically even if there is little or no real monthly job growth. Of note is the fact that educational and health services, the only supersector with annual growth, showed a gain of only 1.8 percent over the past 12 months. As recently as July educational and health services showed annual growth of 3.4 percent. After two months of good results professional and business services showed an annual loss of 5.5 percent compared to a loss of 10.1 percent as recently as August. Construction losses are also flattening out with employment down only 6,000 over 12 months.

Mining and Logging

An estimated 200 jobs were added in mining and logging for the month of November. It is a little difficult to interpret monthly data this year because, with the number of layoffs and recent callbacks in iron mining, the usual seasonal patterns have been altered. This makes for much less certainty in deciphering the data. Over the past year the supersector showed a loss of 1,200.

Construction

There has clearly been a diminution of losses over the last few months in construction. The last large monthly decline took place last June, and since that time there has been a net increase of 2,000 jobs, 1,200 of which came in November. November numbers showed more reduced levels of seasonal layoffs than expected. At this point the most that can be said is that the bottom seems to have been reached in construction employment and that employment is now bouncing around at the bottom, not posting substantial losses but not creating sustained job growth either. Most of the monthly gain came from specialty trade contractors, especially building equipment contractors. Over the last 12 months the supersector lost 6,000 jobs, equal to -5.8 percent. This is less than half the rate of loss in September, although much of the improvement in annual rate of change was caused by the sharp drop in employment experienced last November rather than current growth. Residential building construction still showed a very large 22.5 percent decline over 12 months.

Manufacturing

Manufacturing added 800 jobs in November on the strength of gains in nondurable-goods manufacturing. A substantial part of the 1,400 jobs added in nondurable goods was in food manufacturing. Durable-goods manufacturers posted a loss of 600 with a general condition of slightly weaker results present in its component industries. The annual rate of loss for the supersector was 11 percent, with 85 percent of the loss occurring in durable-goods manufacturing where there were no bright spots. Medical equipment and supplies manufacturing lost only 200 jobs, but most of the durable-goods manufacturing industries showed double-digit rates of annual decline. Nondurable-goods manufacturing was down 4.5 percent with a very large part of this in paper manufacturing and in printing and related support activities which showed a decline of 3,700.

Trade, Transportation, and Utilities (TTU)

Employment increased 2,600 in trade, transportation, and utilities for November. This was largely from an increase in retail trade. After experiencing a loss of 3,800 in October (revised), retail trade showed a gain of 2,100 in November. This matches anecdotal reports that retailers were delaying seasonal hiring until they had a better idea about holiday demand. Preliminary reports for U.S. retail sales in November showed an increase of 1.3 percent, with an 0.8 percent increase outside of autos and gasoline service stations. This increase was substantially higher than expected. Wholesale trade also added 1,300 jobs about equally split between durable and nondurable wholesalers. Transportation industries were again down for the month. On an annual basis the supersector was down 3 percent compared to 4.3 percent (revised) last month. Retail trade was an area where the rate of annual growth was impacted the most by the radical downturn last year, losing nearly 3 percent of employment from October to December 2008. Employment has certainly not improved much, but as we are now comparing to these lower levels, annual rate of change for retail has improved from -2.4 in October to -0.6 percent in November. Transportation and warehousing showed no sign of improvement with the over-the-year loss near a record.

Information

Employment fell 900 in information industries. There were small losses in publishing and telecommunications industries, but most of the monthly loss came from outside these industries. Over the past year the supersector has lost 3,000 jobs. About one-third of the loss was in newspaper, periodical, book, and directory publishing. Most of the rest of the loss came in industries not estimated.

Financial Activities

There was a small increase in financial activities with the finance and insurance and the real estate and rental and leasing sectors each adding 200 jobs over the past month. The over-the-year comparison showed a relatively small loss equal to 600 with the loss split equally between the finance and insurance and the real estate and rental and leasing sectors.

Professional and Business Services (PBS)

There has been substantial improvement in professional and business services in the past two months, up 7,500 in October (revised) and 1,700 in November. This was largely driven by increases in administrative and support and waste management that totaled 9,100 over the past two months. Increases in employment services were very substantial for this period. The national employment numbers also showed robust growth in these areas. During the last recession employment services began increasing a short time before more widespread job growth began to occur. On an annual basis the supersector showed a loss of 5.5 percent, a large improvement over the 10.1 percent loss registered in August. The professional, scientific, and technical services industry was down 7.6 percent over the year and has not shown much improvement in this measure. Likewise, management of companies is not improving with an annual loss of 6.3 percent. All of the improvement has come in administrative and support and waste management, which showed a loss of 2.6 percent in November, a dramatic improvement from losses of about 15 percent in July.

Educational and Health Services

The loss of 1,100 in educational and health services was entirely caused by weak results in health care and social assistance, which fell by 1,300 jobs. Every single estimated industry in health care and social assistance produced weaker results, a rare occurrence in recent years. Growth in the supersector has slowed steadily since April when annual growth was 4.4 percent. In November annual growth measured 1.8 percent. The educational services industry has weakened somewhat since last spring and is now -2.0 percent compared to last year. Also of note is the substantial weakening of job growth in hospitals, which began the year with annual growth of 3.5 percent but turned negative in October and was -0.9 percent in November.

Leisure and Hospitality

There was essentially no change in employment for leisure and hospitality in November after some rather large gains and losses over the previous six months. Compared to last year, employment was down 1.3 percent compared to -1.6 percent for the nation as a whole. All of this loss was in arts, entertainment, and recreation which was down 3,600. Food services and drinking places was a counterweight showing an increase of 1,500 since last November.

Other Services

Other services employment was down 400 in November. Employment in personal and laundry services was weak for the month. Over the past 12 months the supersector lost an estimated 3,800 jobs with the decline fairly evenly distributed across the three major component industries.

Government

Government employment fell 2,400 in November with losses in all three component industries. Federal government employment was down in part from a temporary reduction in workers for the new census, but also because of reduced hiring at post offices. The census workers should return in coming months. The loss in state government showed the effect of reduced hiring at colleges and universities. Over the past year the supersector was down 1.2 percent. State government showed a decline of 2,300 jobs since last November; local government was down 2,400.

* 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.

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