Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us

Note: Except for the Minnesota Labor Market Index, the U.S. Labor Market Index, and the PMI, all over-the-year data are seasonally unadjusted. The most recent data available are for November 2009.

The Minnesota Labor Market Index jumped 2.1 percent in November climbing to 115.9. This increase was fueled by falling seasonally adjusted initial claims and a slight improvement in adjusted weekly manufacturing hours. A small drop in adjusted wage and salary employment was not enough to slow the index’s advance. The U.S. index increased for the third straight month climbing 1.3 percent in November.

Both indices continue to indicate slowly expanding economic activity in Minnesota and nationwide, but the recovery has been bumpy and is likely to continue to be uneven during the first few months of 2010. Minnesota’s index is off 16 percent from its pre-recession peak while the U.S. is off 20.2 percent as of November.

After increasing for only the second time in 2009 in October, seasonally adjusted Wage and Salary Employment inched down in November as the state’s employers cut 1,500 jobs. November’s 0.1 percent job decline was concentrated mostly in service-providing sectors with job loss occurring in government, leisure and hospitality, information, educational and health services, and other services. Job gains were strongest in professional and business services and in trade, transportation, and utilities.

The second-straight month of rising professional and business services employment can be traced to a pickup in hiring at temporary work firms. Expanding payrolls at temporary employment agencies is a promising development, as a more broad-based acceleration in hiring in the past has been preceded by increasing temp-help employment. The over-the-year job decline in Minnesota based on unadjusted employment data improved to 3.2 percent in November, the best monthly reading since April.

Adjusted newspaper Help-Wanted Ads rose a record-setting 101.9 percent in November. Although printed help-wanted ads more than doubled in November, the level was still 18.4 percent lower than last November’s level on an unadjusted basis. Hiring remains subdued as evidenced by the 0.5 percent decline in Minnesota’s online help-wanted ads in November as reported by the Conference Board, Inc. Online help-wanted ads in Minnesota and nationally have remained relatively flat over the last six months reflecting the restrained hiring pace in 2009.

Minnesota’s Purchasing Managers’ Index (PMI) inched up for the second straight month in November, which is consistent with an economy that is slowly improving but hasn’t really gained a lot of traction over the last few months. The upward trajectory of the index continues to point toward stronger economic activity during the first half of 2010.

Adjusted weekly Manufacturing Hours increased in November for the second month in a row and for the fourth month out of the last five. Minnesota’s manufacturing sector is gradually recovering from the recession, but the rebound is going to be a long grind. Manufacturing hiring is unlikely to show any signs of life until the average factory workweek moves past 40 hours.

The recent robust increase in adjusted weekly Manufacturing Earnings slowed somewhat in November, but factory paychecks continued to increase climbing to $767.08. Wage reductions and reduced hours initiated during the recession are being reversed as evidenced by the 8.1 percent increase since last November in real unadjusted manufacturing earnings.

Adjusted Business Incorporations slipped for the second month in a row in November sliding 6.4 percent. November’s unadjusted volume of 458 business incorporations fell 19.6 percent short of last year’s volume. Registrations of limited liability companies (LLC), which aren’t counted in the business incorporation number, totaled 1,723 in November or 16.9 percent more than a year ago.

Seasonally adjusted Residential Building Permits showed more signs of life as October’s spike in building permits was followed by another uptick in November. November’s 11 percent increase to 928 was the highest monthly total since February 2009. Home-building activity, while showing modest signs of improvement, still has a long way to go to get back to any sense of normalcy.

November’s 6.9 percent drop in adjusted Initial Claims for Unemployment Benefits erased some of October’s big spike, but claims remain stubbornly high and help explain why Minnesota’s employment total continues to slip. Even though Minnesota’s economy is growing, the pace of growth hasn’t been strong enough to reduce the layoff rate to generate net job growth.

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