Industrial Analysis

by Jerry Brown - jerry.brown@state.mn.us 
January  2011

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

Overview

December estimates indicated an extremely large job loss equal to a decline of 22,400. Such a poor result does not necessarily mean the state’s economy is suddenly hitting the skids again. It does mean that December’s results were much weaker than expected with only one of the supersectors showing a gain for the month, that being the addition of 200 jobs in mining and logging. Every other supersector posted a loss for the month ranging from a decline of 200 in information to losses of 4,200 and 5,300 in trade, transportation, and utilities and in government, respectively. It is rare for nearly universal substantial losses to occur among industry supersectors, but the estimates showed such an occurrence in December. The large monthly loss caused a significant decline in the rate of annual change, down from 1.8 percent (revised) in November to 1.1 percent in December. In all, seven of 11 supersectors posted annual growth in December. The fastest rate of growth was in information with a gain of 4.2 percent. The largest numerical change was in manufacturing where an increase of 10,700 occurred.

Mining and Logging

Mining and logging increased by 200 for the month, posting the only monthly employment gain among industry supersectors. This increase helped push annual growth for the supersector to 600.

Construction

Construction employment fell by 1,700 jobs in December as all three major component industries were weaker for the month, but particularly commercial building construction. This was the third consecutive monthly loss in construction with a net decline of 2,400 during this time. Employment is now only a little above the recession trough experienced in August. Compared to last year, employment showed a loss of 4,700 equal to -5.7 percent. The majority of the loss was in specialty trade contractors, but the losses in construction of buildings fell at a faster rate, down 12.4 percent compared to -6 percent in specialty trade contractors.

Manufacturing

Employment fell by 1,800 in manufacturing in December. Nearly all of the loss came in durable-goods manufacturing. Areas with weak results included machinery manufacturing, computer and electronic product manufacturing, and wood product manufacturing. The monthly loss helped pushed the over-the-year rate of change down from 4.3 percent in November to 3.7 percent in December. Durable-goods and nondurable-goods manufacturing showed similar rates of annual increase, up 3.7 percent and 3.4 percent, respectively. The largest annual increases came in fabricated metal product manufacturing, up 3,200, and computer and electronic product manufacturing, up 1,900.

Trade, Transportation, and Utilities

Monthly losses in retail trade and in transportation, warehousing, and utilities led to a monthly decline of 4,200 in trade, transportation, and utilities. The drop of 2,700 in retail trade followed a decline of 2,800 in November. Retail industries showing poor monthly growth included general merchandise stores, motor vehicle and parts dealers, and building material and garden equipment and supplies dealers. After posting strong growth in recent months there was a pullback in growth in transportation, warehousing, and utilities employment where there was a loss of 2,200 for the month. While truck transportation and couriers and messengers were somewhat weaker, most of the decline came in other transportation and warehousing industries. Compared to last year the supersector was up 4,300. Nearly all of the increase was in retail trade, which added 4,100 jobs. General merchandise stores accounted for the majority of the retail increase.

Information

There was little change in information employment over the past month as the supersector lost 200 jobs. Over-the-year comparison showed a gain of 2,800 jobs.

Financial Activities

There was a moderate loss of 800 jobs estimated for financial activities in December. Most of the loss came in finance and insurance caused by a weakness in credit intermediation and insurance. After losing 2,800 jobs the past two months, supersector employment is back down to its recessionary low posted last May. On an annual basis financial activities showed a loss of 1,100 with small losses in nearly every estimated industry grouping.

Professional and Business Services 

Losses in each of its main component industries yielded a substantial decline of 3,500 jobs in professional and business services in December. The majority of the loss came from administrative and support services, down 2,100 for the month. Even with December’s loss the administrative and support services has added 5,500 jobs since September largely in employment services. Management of companies was down 700 for the month and has not had a monthly gain since August. Professional and technical services posted its first loss since August, down 700 for the month. Compared to last year the supersector showed a gain of 8,300 or 2.7 percent. Administrative and support accounted for most of the gain, up 7,800, with 7,000 in employment services. The remaining growth came from professional, scientific, and technical services, up 1,000 for the year.

Educational and Health Services

For the third time in the last four months there was a monthly employment loss in educational and health services, down 3,000 for the month of December. The vast majority of the loss was in health services where employment was down 2,400. While health services showed a general weakness, the main loss came from social assistance. This industry has been on a consistent upward path for some time, and there is no apparent reason for the sudden change. Monthly losses from educational services totaled 600 and came largely from private colleges. The supersector added the second highest number of jobs over the past year, up 9,800. Health care and social assistance accounted for 6,800 of the gain including 2,800 additions in nursing and residential care facilities. Despite a very weak December, social assistance still showed a gain of 1,900 for the year.

Leisure and Hospitality

Leisure and hospitality employment fell 1,800 in December with arts, entertainment, and recreation off 1,000 and accommodation and food services down 800. After showing a net gain of 15,200 from March through July, leisure and hospitality employment has fallen four of the past five months erasing 5,700 of this increase. The annual rate of growth fell to 4.2 percent for the supersector, equal to 9,600 added jobs. Since July the rate of annual growth has fallen steadily, down 2.2 percentage points during this period. Every industry showed annual gain, but about 8,100 of the increase came in food services and drinking places.

Other Services

Other services employment fell by 300 for the month of December. The supersector continued to show a moderate annual loss, down 2,300 compared to December of 2009.

Government

Government employment fell by 5,300 for the month of December, reflecting two major factors.  The first was a reversal of the additions made in local government in November with the hiring of election staff. The result was a loss of 3,500 in local government in December. The second factor was somewhat larger seasonal layoffs at public colleges and universities associated with the winter holiday. Over the past year government employment showed a loss of 7,000 with declines in all components. All of the loss of 1,900 in state government came from state government education. Local government saw an estimated loss of 4,400 with local government education down 2,200.

* 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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