Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
December 2010
 
Note:  All data except for the Minnesota Index, U.S. Index, Minnesota Leading Index, and PMI have been seasonally adjusted.  Minnesota Leading Index data are current through October 2010 while all other indicators are current through November 2010. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.

The Minnesota Index climbed for the 14th consecutive month in November increasing 0.1 percent. November’s advance was slightly stronger than October’s increase signaling that Minnesota’s economy has been gradually gaining strength over the last few months. The U.S. index also climbed 0.1 percent in November, the fifth straight monthly advance. Minnesota’s index is up 3.1 percent from a year ago while the U.S. index has climbed 1.9 percent over the last 12 months. Minnesota’s 3.1 percent increase ranks eighth among the states.

Minnesota’s seasonally adjusted Wage and Salary Employment reversed directions in November as employers cut 5,100 jobs after adding a revised 16,000 jobs in October. All of the net job growth occurred on the goods-producing side with manufacturing employment increasing for the ninth month this year. Service-providing employment dropped by 6,100 positions with most of the job cutbacks occurring in leisure and hospitality, in financial activities, in trade, transportation, and utilities, and in other services.

Job growth was strong in government, manufacturing, and professional and business services. Professional and business services’ job growth occurred at architectural, engineering, and related services firms and at temporary-work agencies. Hiring at architectural, engineering, and related services’ firms is a promising sign of a construction uptick down the road. The state’s over-the-year job growth for unadjusted employment was 1.7 percent for the second month in a row, which is nearly triple the 0.6 percent rate recorded nationally.

The Minnesota Leading Index, increased for the second time in three months in October. October’s 1.39 reading suggests that Minnesota’s economy will continue to expand through the first half of 2011 as a positive leading index points toward economic expansion over the six-month horizon. The index first pointed toward slower growth during the middle of the year back in April. The recent uptick suggests that the economy is gaining strength.

The Minnesota’s Purchasing Managers’ Index (PMI) rose for the first time in five months in November climbing to 56.2. Minnesota’s businesses appear to be a little bit more optimistic about near-term business prospects. The only negative news out of November’s PMI numbers is the 49.1 reading for the employment component. Any reading below 50 suggests that businesses expect payrolls to shrink over the next few months. November’s 49.1 was the first sub-50 employment reading of the year.

The strong October showing for seasonally adjusted Residential Building Permits was almost totally swept out by November’s weak 658 count. Building permits plunged 39 percent in November as home building activity in the state continues to bounce along the bottom. Unadjusted home building permits were 15.2 percent lower in November compared to a year ago.

Adjusted weekly Manufacturing Hours inched up in November but not by much, essentially remaining at 40.9 for the third month in a row. The factory workweek in Minnesota climbed through most of 2010 but remains short of the pre-recession workweek.

Adjusted weekly Manufacturing Earnings slipped in November to $772.20. Inflation-adjusted factory paychecks are up 2.7 percent from a year ago, which should help boost consumer spending.

Adjusted online Help-Wanted Ads climbed for the fifth consecutive month, but the increase was only 0.5 percent, the smallest monthly gain in 2010. Minnesota’s job growth should continue to run ahead of the national pace during the first quarter of 2011 as online help-wanted levels for Minnesota continue to outpace nationwide levels. Minnesota’s over-the-year jump in online ads as collected by the Conference Board, Inc., was 52.1 percent versus 30.8 percent across all states. Monster Worldwide, Inc., also measures online help-wanted ads, and by their numbers Minnesota help-wanted ads are up 37 percent from a year ago while nationally ads are up only 13 percent.

Adjusted Initial Claims for Unemployment Benefits (UB) tailed off for the third straight month. November’s 3.2 percent decline was the biggest drop since March. The rise in initial claims during the middle of the year was consistent with an economy that was losing momentum. Falling initial claims over the last few months is consistent with an economy that is gaining traction. Minnesota’s job market will continue to show improvement during the first half of 2011, but, as in 2010, it will be two steps forward and one step back.