Industrial Analysis

by Jerry Brown - jerry.brown@state.mn.us 
December  2010

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

Overview

Employment declined by 5,100 jobs in November as seven of 11 supersectors declined for the month. The largest loss came in leisure and hospitality, down 4,000. Financial activities was down 2,900 from a general weakness in the supersector. Trade, transportation, and utilities fell 2,100, and other services was down 1,400. The largest gain for the month was in government with much of this growth likely caused by additions in local government associated with the November election. The loss in November partly offset the large increase of 16,000 posted in October (revised). On an annual basis the state added 44,800 jobs, equal to 1.7 percent growth. Seven supersectors showed annual growth with four supersectors adding more than 10,000 jobs. The largest gain was in educational and health services, up 13,400. Manufacturing and professional and business services also posted strong growth, adding 12,900 and 12,200 jobs in the past 12 months respectively. Despite a very weak month, leisure and hospitality employment was 10,300 higher than last year. Smaller gains were present in trade, transportation, and utilities, in information, and in mining and logging. Construction showed by far the largest over-the-year loss at 5,300. A very poor month helped push the annual decline in financial activities to 3,400. Job reductions were also present in other services, down 2,800, and in government, down 1,700.

Mining and Logging

Employment for the month of November did not change in mining and logging, following a gain of 200 in October. There has been no net change in employment since June for the supersector. Over the past year the supersector showed a gain of 500.

Construction

Construction employment was down 600 in November, following a loss of 200 in October. Over the past six months the supersector has added a net 300 new jobs, which reflects a substantial improvement over the losses in the preceding two-plus years. The November declines were essentially all in specialty trade contractors. The supersector still showed a substantial reduction of 5,300 over the past 12 months, a 5.6 percent change. Large losses were still present in specialty trade contractors, down by 8.1 percent, and in construction of buildings, down 6.3 percent. Heavy and civil engineering construction showed a small gain of an estimated 600 jobs.

Manufacturing

Gains in both durable- and nondurable-goods manufacturing led to a job increase of 1,800 for the supersector in November. Nondurable-goods manufacturing added 1,300 as seasonal layoffs were well below normal in food manufacturing. Food manufacturing usually declines about 3.5 percent for the month on an unadjusted basis compared to the decline of 1.9 percent in November. Similarly, printing and related support activities showed an unadjusted gain of 3 percent rather than the usual small monthly loss. Compared to last year the supersector is vastly improved in 2010. Growth over the past 12 months measured 4.4 percent which is substantially better than growth of 0.8 percent for the U.S. as a whole. In November 2009 the rate of annual growth was -12.2 percent having just hit the worst rate of annual change at -13 percent in October 2009. The Business Conditions Index for Minnesota produced at Creighton University reported a substantial increase for November, up to 56.2 from 52.8 in October. This was the 16th month the index was above growth neutral and indicates healthy conditions for manufacturing in Minnesota.

Trade, Transportation, and Utilities

After a healthy gain in October the trade, transportation, and utilities supersector gave back much of that gain with a loss of 2,100 jobs in November. The main source of weakness for the month was retail trade where seasonal hiring was short of usual levels, particularly in general merchandising and in food and beverage stores. Employment in wholesale trade was weaker, posting a loss of 1,000 for the month. A third consecutive strong month in transportation, warehousing, and utilities, up 2,200, offset some of these losses. Most of the gain in transportation, warehousing, and utilities is coming from outside trucking and couriers and messengers. Over the past year the supersector increased employment 1.2 percent, down from 1.6 percent in October. Retail trade added 3,700 jobs over the year, and transportation, warehousing, and utilities added another 3,300. These additions were partly offset by a loss of 1,200 in wholesale trade, caused particularly by losses in wholesale electronic markets.

Information

There was little change in information employment for the month of November as employment fell 200 despite positive results in publishing industries. The annual rate of growth was estimated at 5.3 percent with nearly all of the gain coming from outside publishing and telecommunications.

Financial Activities

November proved to be a very poor month for employment in financial activities with essentially every estimated industry showing weak results for the month. This general weakness led to a monthly loss of 2,900 for the supersector. Of this loss, 1,900 came from finance and insurance with the decline split fairly evenly between insurance carriers and depository banking. Real estate and rental and leasing lost 1,000 with most of the decline in real estate employment. After showing improvement in September and October, the rate of annual change worsened to -2 percent. The main sources of weakness included depository credit intermediation, securities, commodity contracts and other related, and real estate. Insurance carriers and related activities showed a gain of 1,100.

Professional and Business Services 

Employment grew by 1,500 in professional and business services in November following the very robust gain of 6,400 in October. All of the November increase was in administrative and support industries where employment was up 2,000 mainly from gains in employment services. Partly offsetting this growth were losses of 300 in management of companies and 200 in professional and technical services. November marked a third consecutive month of strong increases in employment services, which usually declines in excess of 2 percent in unadjusted employment in November. In 2010 seasonal layoffs were much slower with no decline in the unadjusted data from October to November. Professional and business services had the third largest numeric gain over the year, up 12,200. About 85 percent of the annual gain came from administrative and support industries. Employment services showed strong growth, up 15.2 percent over last November. Professional, scientific, and technical services added 1,700 to the supersector’s annual increase.

Educational and Health Services

Educational and health services employment was down 700 for the month of November. All of this loss came in private educational service, which fell by 1,000 jobs. After strong growth in recent months, private colleges and universities posted weak employment estimates — the main reason for the monthly loss in private educational services. Health care and social assistance experienced a small gain of 300. Employment was up 13,400 compared to November 2009. Annual growth was present in every estimated industry. Private colleges and universities was a major source of job growth, up 3,300 annually. This growth was matched by social assistance, which also increased about 3,300. Nursing and residential care facilities increased by 2,500 jobs, with about 1,100 in nursing care facilities. Ambulatory health care added 2,500, and hospital employment was up 1,100.

Leisure and Hospitality

The largest loss of any supersector occurred in leisure and hospitality where employment fell by 4,000 jobs over the month — with a loss of 3,400 in arts, entertainment, and recreation. The seasonal decline in this industry group was much larger than normal, down 24.1 percent on an unadjusted basis, the largest monthly decline on record. Accommodation and food services was also weaker for the month with a seasonally adjusted loss of 600. Over the year the supersector added 10,300 jobs. Nearly all of this gain came from food services and drinking places (up 8,600). Job growth occurred in all of the estimated areas including growth of 700 in accommodation and 1,000 in arts, entertainment, and recreation.

Other Services

Other services employment fell for the fourth time in the last six months during which time a net loss of 800 occurred. The November loss was estimated at 1,400 largely caused by weakness in religious, grantmaking, civic, and professional services. Compared to last year, November estimates showed a loss of 2,800 of which 2,100 were in religious, grantmaking, civic, and professional services.

Government

After posting declines the two previous months, government employment rose by 3,500 in November. All of the monthly growth came in local government (up 4,300), with most of the gain occurring outside local government education, which was boosted by the hiring of poll workers for the November election. State government was down 800 jobs. On an annual basis government lost 1,700 jobs. Federal government lost 900, mostly in U.S. post offices. State government showed little change. Local government education was down 4,400 jobs, but this loss was all but eliminated by gains in the noneducational portion of local government.

* 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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