Industrial Analysis

by Jerry Brown - jerry.brown@state.mn.us 
January 2009

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

Overview

Employment in Minnesota fell by 11,800 jobs in December marking a sixth consecutive month of losses and the eighth month in 2008 to show a loss. This is the third loss in excess of 11,000 for the year. Of note is a significant revision to November estimates pushing the loss for that month to 23,800, the largest seasonally adjusted loss on record. In December there was once again generalized weakness with only Educational and Health Services showing strong growth for the month on the strength of 3,900 additional jobs in health and social assistance. Eight supersectors showed losses for the month. The largest declines were in Trade, Transportation, and Utilities, which was down 5,300, Manufacturing, which was down 2,900, and Government, which was also down 2,900. Construction, Professional and Business Services, and Leisure and Hospitality showed large declines as well with losses of 1,100, 1,600 and 1,400, respectively. With the second half of the year down 54,400 jobs on a seasonally adjusted basis, the rate of annual growth was drastically lower. December showed an over-the-year loss of 2 percent equal to the rate of annual decline for the nation as a whole. Nine of 11 supersectors showed a loss over the year. After another weak month, employment in Construction showed an annual loss of 10 percent. Only two supersectors showed annual growth — Educational and Health Services up a robust 2.5 percent and Financial Activities up 0.9 percent.

Natural Resources and Mining

Losses among mining companies led to a monthly decline of 100 jobs in December. Annually, the supersector showed a loss of 300, again from mining companies.

Construction

Employment in Construction continued to weaken in December, down 1,100, to post a fourth consecutive monthly loss and fifth loss in the last six months. The monthly loss was largely centered in construction of buildings. November estimates were revised downward to show a loss of 4,400. After four very weak months, the annual rate of growth has plunged from -4.8 percent in August to -10 percent in December. Construction of buildings showed a decline of 3,500 in the past 12 months and specialty trade contractors was down 7,800.

Manufacturing

Following the statewide pattern, Manufacturing employment fell for a sixth consecutive month, down 2,900 in December. During this time losses have averaged 2,300 jobs per month. The bulk of the declines have been in durable-goods manufacturing, which fell 2,600 in December. Nondurable goods, while posting numerically smaller declines, nonetheless has shown losses in nearly every month in 2008. The renewed weakness in the second half of 2008 boosted losses to 15,600 over the past 12 months, the largest decline of any supersector. Nearly every estimated industry now shows declines over the year with particularly large declines in fabricated metal products, wood product, transportation equipment, and printing and related manufacturing.

Trade, Transportation, and Utilities (TTU)

Trade, Transportation, and Utilities posted a third straight month of employment loss with December’s decline estimated at 5,300. During the past three months the supersector lost an estimated 15,300 jobs. In December all three of the supersector’s major components dropped sharply with transportation, warehousing, and utilities down 2,700, retail trade down 1,600 and wholesale off 1,000. Of note has been the sharp reduction in seasonal hiring in retail trade where seasonally adjusted employment was down 9,000 over the past three months. The rate of annual loss was 2.8 percent, equal to a decline of 15,300 jobs. The main cause of the loss was retail trade, down 7,200 jobs. Results for most retail industries are substantially negative on an annual basis. With reduced travel and less demand for shipping services, transportation and warehousing showed a loss of 5,800. The other major loss was in nondurable-goods wholesaling, which was down nearly 2,300 from a year ago.

Information

Employment increased by 100 jobs in the Information supersector as telecommunications showed a small increase for the month. This is only the fourth month with employment growth for the supersector during the year. Compared to December 2007, the current month shows a loss of 1,300. About half of these losses came in publishing industries mainly caused by the weakness in print publishing. Since telecommunications showed a modest increase, a substantial loss was present in the industries for which estimates are not made.

Financial Activities

Financial Activities experienced a monthly loss of 600 jobs. This was entirely from declines in real estate and rental and leasing. This is the third month in the last four showing a loss for the supersector, which showed unexpected strength during the first eight months of the year. Finance and insurance has shown some weakening since August, but real estate and rental and leasing has lost employment each of the last six months. Financial Activities remained one of only two supersectors showing a gain over the past 12 months. The gains were all from depository credit intermediation and insurance carriers, which outweighed substantial losses in real estate and rental and leasing.

Professional and Business Services (PBS)

Professional and Business Services employment declined by 1,600 jobs in December following a very large drop (4,500) in November. The supersector has lost employment for nine months in a row. These losses were driven largely by declines in administrative and support services where employment is down more than 13,000 over the past eight months. This large decline is to be expected since a large part of the employment in this business grouping is in employment services, which is highly responsive to economic conditions. On an annual basis the supersector showed a loss of 14,400. Most of this loss was in administrative and support services. Employment services in particular showed a -12.8 percent over-the-year change. This is still short of the largest annual decline of 21.5 percent in January 2002.

Educational and Health Services

The gain of 4,000 in Educational and Health Services was the largest in recent years, with 3,900 of the increase in health and social assistance. The increase in health and social assistance industries was broadly distributed, but ambulatory health care and hospitals were particularly strong for the month. The supersector is the main source of strength in the job market, with only four months of employment loss in the past year. Compared to last December the supersector has added 11,000 new jobs with 4,600 in hospitals, 2,700 in social assistance, 2,500 in ambulatory health care, and 1,300 in nursing and residential care.

Leisure and Hospitality

Leisure and Hospitality weakened yet again in December with an estimated 1,400 fewer jobs. The supersector has lost jobs in six of the past seven months. The revised November estimates reduced employment to show a monthly loss of 6,900. During the last 12 months supersector employment fell 8,400. Every estimated component industry shows losses over the year. Arts, entertainment, and recreation showed a loss of 4,400 in large part because of very weak results in November. Accommodation and food services was down about 4,300 jobs for the year.

Other Services

There was no change in Other Services employment over the month. The annual change was -1.2 percent with losses in every component industry.

Government

Employment is estimated to have dropped 2,900 in Government with losses in each of the three major components. Local government employment fell by 1,700 with losses of 600 in both federal and state government. November estimates for local government employment were revised downward by 4,900, owing to a substantial difference in the growth reported by the units delivering data after the initial estimates were completed. Compared to year-ago data, Government employment showed a loss of about 100 with declines in local and federal government outweighing gains in state government education.

* 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.