Industrial Analysis

by Jerry Brown - jerry.brown@state.mn.us 
June 2010

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

Overview

Employment increased 5,600 in May as a large increase in temporary Census workers helped push the employment number up. Nine of the 11 supersectors showed increases for the month with the largest increases coming in government, up 3,000, educational and health services, up 2,600, trade, transportation, and utilities, up 1,300, and an increase of 1,200 in business services. There were large losses in construction, down 2,200, and financial activities, down 1,400. So generally the data showed more positives than negatives in the May seasonally adjusted data. The over-the-year comparison showed improvement again in May with the annual change measuring -0.2 percent, compared to -0.8 percent in April. The impact of the Census increase is obvious in the 6,200 jobs added over the year in government compared to a 1,200 increase registered in April. Gains were also present in professional and business services, educational and health services, and mining and logging. Losses were still the rule for most of the supersectors with the largest losses in construction, other services and financial activities.

Mining and Logging

Mining and logging added 200 jobs in May, following a gain of 100 last month. Over the past year the supersector added 100 jobs.

Construction

Job losses in construction accelerated once again in May, down 2,200, after losses of 100 and 600 the previous two months. The monthly job loss was distributed across the component industries as every estimated industry showed significant weakness. Compared to a year ago, construction showed a loss of 13.1 percent.  This rate of loss is below the average annual loss of 16 percent in 2009 but does not represent a major improvement. Specialty trade contractors experienced the vast majority of the job losses with employment off by 18.8 percent. Heavy and civil engineering construction continued to post gains, up 1,500 jobs compared to last year.

Manufacturing

Manufacturing continued its growth trend in May by posting a gain of 400 to notch a fifth consecutive increase. Durable-goods manufacturing lost 200 jobs with losses in transportation equipment and wood product manufacturing slightly outweighing gains in other industry groupings including fairly strong growth in fabricated metal product manufacturing. Nondurable-goods manufacturing provided the supersector growth adding 600 jobs for the month. Much of this increase came in printing and related support activities, which posted strong gains for the month. The combination of strong results in recent months and substantial weakness in 2009 has helped to improve the rate of annual change in manufacturing drastically. Annual growth for manufacturing measured -0.6 percent in May, with steady improvement from an annual loss of 9.8 percent last January. Minnesota’s manufacturing sector is substantially outperforming the nation as a whole which showed an annual loss of 2 percent in May.

Trade, Transportation, and Utilities (TTU)

There was an increase in employment of 1,300 jobs in trade, transportation, and utilities. This was the fourth increase in the last five months. The increase came mainly from transportation, warehousing, and utilities, which increased 1,900. After a very large increase in April, retail trade employment fell by 900 in May as Census Bureau estimates showed a 1.2 percent monthly loss in retail sales for the U.S. Much of the loss in retail trade came in food and beverage stores where the unadjusted employment fell 0.5 percent compared to an average monthly increase of 1.8 percent experienced the previous five years. Truck transportation showed a substantial gain for the month accounting for much of the increase in transportation, warehousing, and utilities. Over the past year the supersector showed a loss equal to only 0.1 percent. All of this loss was in transportation and warehousing where a decline of 4,200 was posted. Retail trade was up 3,200 jobs over last year with general merchandise stores adding 2,000. Increases in durable-goods wholesaling erased small losses elsewhere in wholesaling to yield a gain of 500 in wholesale trade employment compared to last May.

Information

Information employment experienced a second straight monthly increase, up slightly to 54,600 in May. Most of the estimated 200 jobs added for the month were outside traditional publishing and telecommunications industries. Over-the-year comparisons showed a loss of 100 in information, a sharp improvement over an annual loss of 1,900 registered in January 2010. Since that time the supersector has shown steady improvement.

Financial Activities

There was a loss of 1,400 jobs in financial activities with losses of 900 in finance and insurance and 500 in real estate and rental and leasing. The seasonally adjusted monthly loss for the supersector is one more month in a very long downward trend in employment. Since the start of 2008, employment has fallen 23 times in 29 months. The weak job performance in May was spread across most of the estimated industries in the supersector. On an annual basis the supersector lost about 4,800 jobs, equal to 2.8 percent. Outside of insurance carriers, every industry for which estimates are prepared showed losses compared to last year. Finance and insurance was down 3,700 with depository institutions down 1,000 and securities, commodity contracts, and other related off by 1,500. Real estate showed a decline of 1,300.

Professional and Business Services (PBS)

May’s employment gain of 1,200 in professional and business services reflects a wide variation of results in its component industries. Professional, scientific, and technical services lost 2,500 jobs with much of the loss coming in accounting, tax preparation, bookkeeping, and payroll services. The remainder of the supersector showed substantial job growth, which easily eclipsed the losses in professional, scientific, and technical services. The most important area of growth was in administrative and support and waste management which added 3,100 jobs, much of which came in employment services. Management of companies was up 600 for the month, erasing a loss of 600 posted for April (revised). The net effect was a reversal of a two-month period of losses in March and April. With a predominance of employment gains during the last eight months, the supersector has experienced a major turnaround with annual growth reaching 2.5 percent in May, up from -4.8 percent last December. All of the gains came in administrative and support and waste management, which saw particularly strong growth in employment services. Losses were still present in the other two major components with professional, scientific, and technical services off 4,000 and management of companies down 1,600.

Educational and Health Services

The monthly gain of 2,600 in educational and health services reflected fairly broad growth in the supersector. Private educational services added 800 jobs in May despite a slight weakness in private college employment. A gain of 1,800 came in health care and social assistance following a gain of 900 in April. Much of the gain was in social assistance, but hospitals showed signs of growth as well. The supersector’s annual gain was 6,400 jobs. Health care and social assistance added 3,300 jobs, all in social assistance and in nursing and residential care facilities. Hospitals showed a loss of 1,400 and ambulatory health care services lost 600 jobs.

Leisure and Hospitality

On net, there was little change in employment in leisure and hospitality on a seasonally adjusted basis. Underlying this, however, were rather substantial declines in arts, entertainment, and amusement which fell by 1,700. With the warm weather earlier in the spring, the May loss was undoubtedly partly a result of seasonal hiring at places like golf courses occurring earlier than is usual. Countering this loss was a very strong month in accommodation and food services, up 1,800 jobs from gains in full service and limited service restaurants. Annually, the supersector lost 1,200 jobs. This loss came from a decline of 3,900 in arts, entertainment, and recreation and losses of 1,200 in accommodation. These declines could not be offset by a gain of 3,900 in food services and drinking places.

Other Services

There was a slight increase of 200 jobs in other services for May. As such, the annual loss for the supersector remained high at 4,900.

Government

A gain of 3,000 in government came entirely from the addition of temporary workers for the 2010 Census. This can be seen in federal government employment where 5,300 jobs were added. This gain easily outweighed losses of 1,300 and 1,000 in state and local government, respectively. Obviously this provided a substantial boost to measures of annual growth, up 1.5 percent in May after registering an increase of 0.3 percent in April. Federal government annual growth jumped from 1.4 percent in April to 18.2 percent in May. State government employment was down 1,400, and local government was up 1,400.

* 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.

Top