Industrial Analysis

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

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

Overview

Following a slowing of job declines in May, June saw a sharp decrease in estimated employment. The estimated decline of 16,700 was among the largest monthly declines registered since job creation began to collapse last fall. There were monthly losses in nine of 11 supersectors. After one positive month, construction employment fell 3,900, and manufacturing, professional and business services, and leisure and hospitality all posted losses in excess of 3,000 as well. The only monthly gains occurred in trade, transportation, and utilities and in financial activities. On an annual basis the news was no better. The annual rate of decline increased substantially to -4 percent. This marks a record level of annual rate of loss eclipsing the -3.9 percent posted in September 1982. Only education and health services and government showed increases. Eight of 11 supersectors showed losses in excess of 3 percent. Four supersectors had losses of 9.9 percent or greater.

Mining and Logging

There was another large loss in mining and logging as additional layoffs took place. We should see the large layoffs of recent months slow in coming months. The losses the past three months drove over-the-year declines to 31.8 percent.

Construction

Seasonal hiring in construction industries was much slower than usual resulting in a loss of 3,900 for the month. Comparing the change in unadjusted data from May to June to the average growth the previous five years, showed the current change was 2.9 percentage points greater. This weakness was felt in all of the component industries. June’s large decline following a gain in May is a clear reminder that we can’t speak of turning points until there is a multi-month trend of improvement. The annual loss increased to 15.7 percent after declining for two months. Specialty trade contracting posted an annual loss of 17.4 percent and was responsible for about 69 percent of the supersector losses.

Manufacturing

Yet another decline in durable-goods manufacturing employment led to a supersector employment level that was down 3,700 over the month. Durable-goods manufacturing has produced losses of between 2,700 and 6,200 for each month in 2009. Essentially every industry grouping estimated in durable-goods manufacturing showed weaker results for the month. Nondurable-goods manufacturing showed no change in employment. Three years of virtually uninterrupted declines have severely reduced job levels in durable-goods manufacturing. Since June 2006 employment in durable-goods manufacturing is down 17.4 percent. On an annual basis the supersector has lost 39,500 jobs since last June. Nearly 80 percent of the loss was posted in durable-goods manufacturing where every estimated industry showed a 12-month loss in June.

Trade, Transportation, and Utilities (TTU)

Trade, transportation, and utilities was one of two supersectors showing growth for the month. The gain of 800 jobs was mainly from retail trade, which added 800 jobs for the month. Wholesale trade lost 200 jobs but was countered by the 200 additional jobs in transportation, warehousing, and utilities. The gain in retail offsets a similar-sized loss from May. There is no reason to suspect this represents a major improvement in retail trade. In fact, recent reports from major retailers concerning June sales showed essentially universally negative results in terms of the year-over-year performance in stores open at least one year. On an annual basis employment was down 3.5 percent with losses registered in each sector. Transportation and warehousing in particular showed a large decline, down 8,500 over 12 months. Additionally the three component industries for wholesale trade all showed substantial losses, and retail trade industries showed nearly universal negative results.

Information

Information employment experienced a fifth consecutive monthly loss, down 700 for the month. In the past five months employment has dropped 3,200. Most of the monthly loss can be attributed to continued weakening of employment in the publishing industry. Over the past 12 months the supersector has lost 2,300 jobs. Slightly less than half the annual decline is reflected in newspaper, periodical, book, and directory publication. There were negligible annual losses in telecommunication industries.

Financial Activities

There was an increase of 600 jobs in financial activities in June. The main cause of the gain was the addition of 500 jobs in finance and insurance, the first gain for this sector since January. Compared to last year, financial activities employment was down nearly 1,600, with the rate of decline measuring 0.9 percent. This decline was, numerically speaking, about evenly split between finance and insurance and real estate and rental and leasing. Substantial losses were present in nondepository credit intermediation, securities, commodity contracts and related, and real estate.

Professional and Business Services (PBS)

There was a general weakness in professional and business services that resulted in an estimated monthly decline of 3,500 in June. About half the supersector’s job loss came from administrative and support services, which was down 1,700 after posting a strong gain in May. The supersector has lost nearly 41,000 jobs since peaking in August 2007, a decline of 12.3 percent. Administrative and support services saw a 20.3 percent decline during this same period. Compared to last June, employment was down 32,900. About 55 percent of this loss came in administrative and support services as there was a collapse of employment growth in employment services, which currently shows an annual change of -17 percent. By all indications we can expect more losses in coming months.

Educational and Health Services

Losses in private education resulted in a net loss of 700 in educational and health services over the past month. The loss in private education was for the most part located in industry areas not associated with private colleges and universities. Given the uncertainty of the timing of seasonal changes in private education, there is every chance for substantial change during final estimation. The supersector remains the only source of consistent job growth and shows the only large over-the-year increase among all the supersectors. In June the annual gain measured 16,200 with most of this growth occurring in health care and social assistance. Hospitals have experienced some decline in recent months resulting in annual growth dropping to 0.9 percent, down from 3.5 percent in January. Growth in ambulatory care, nursing and residential care, and social assistance continues to be robust with growth of 4, 4.4, and 5.8 percent respectively.

Leisure and Hospitality

May estimates were revised downward by 1,900 from preliminary estimates, but the gain was still very strong at 5,200. June estimates by contrast showed a loss of 3,000 reversing much of the May increase. Unfortunately, in a month as weak as June a loss of 3,000 is only the fourth largest supersector loss for the month. Most of the June loss was in accommodation and food services where employment fell by 2,700. The annual change in employment for leisure and hospitality measured -3.6 percent, which placed the supersector in the middle of the pack compared to other supersectors. Accommodation and full-service restaurants experienced the largest decline, 9,400 jobs over the last 12 months.

Other Services

Other services posted a third consecutive monthly loss, down 800 for the month and 1,500 over the past three months. The majority of the monthly loss was in religious, grantmaking, civic, and professional organizations, but all of the components showed weak results for the month. Over-the-year comparisons showed a loss of 4,900 since last June. This was broadly distributed with losses of 6.6 percent in repair and maintenance, 3.9 percent in personal and laundry services, and 3.4 percent in religious, grantmaking, civic, and professional organizations.

Government

Government employment fell by 800 in June as losses in federal and local government totaling 2,700 outweighed a seasonal gain in state government. The loss of 1,200 in federal government is related to reductions associated with the end of some address-refinement activities undertaken as part of the ongoing national census. The loss in local government is mainly from education units. State government education did not show its usual level of seasonal layoffs in June. Over the past year the supersector added 2,500 jobs with nearly all of the gains in non-education-related 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.