Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
June 2011

Note:  All data except for the Minnesota Index, U.S. Index, Minnesota Leading Index, and PMI have been seasonally adjusted.  Minnesota Leading Index data are current through April  2011 while all other indicators are current through May 2011. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.
 

The Minnesota Index advanced faster than the U.S. index for the first time in four months in May jumping 0.3 percent compared to the 0.1 percent national increase. Minnesota’s economy picked up a little momentum in May while the U.S. looks to have hit a soft patch. May’s increase was the 12th consecutive monthly increase and the fastest since last April. Minnesota’s index is up 1.9 percent from a year ago which is just below the 2.2 percent increase recorded by the national index over the year.

Adjusted Wage and Salary Employment numbers were positive in May on two fronts. First, April job estimates were revised cutting job loss in half from the initial estimate. The other good news was the addition of 5,400 private jobs in May. Total employment increased by only 1,200 jobs as public sector job cutbacks of 4,200 offset private sector hiring. Construction and professional and business services led private sector job growth adding 2,200 and 1,900 jobs respectively. May’s construction hiring, however, recouped less than half of April’s job cutbacks as construction employment remains far below normal levels. May’s 81,000 construction jobs were 38 percent below the sector’s peak of 132,000 in February 2006.

Minnesota’s job recovery from the recession continues to crawl with one step backward for every two steps forward. The state lost roughly 158,000 payroll jobs during the recession but has added only 28,000 since job growth resumed in October 2009. Minnesota’s unadjusted over-the-year job growth was 0.6 percent in May, just below the national 0.7 percent increase.

The Minnesota Leading Index dropped for the third consecutive month in April declining to its lowest reading since September 2009. April’s low reading points toward slower economic growth over the next six months which is consistent with falling manufacturing hours but inconsistent with the recent robust PMI readings.    

Minnesota’s Purchasing Managers’ Index (PMI) reversed directions in May climbing to 63.2. May’s reading suggests that Minnesota’s manufacturing sector should show no signs of losing any steam over the next few months. Minnesota’s index has raced past the U.S. and Mid-America indices suggesting that Minnesota manufacturers are expecting more rapid expansion than manufacturers in most other parts of the country.

Minnesota’s bleak home-building industry reached a new low in May recording a 41-year low of 156 adjusted Residential Building Permits. The previous record low was 378 in September 2010. Any hope of a rebound in the state’s home-building industry has now been shifted out to 2012.

Adjusted weekly Manufacturing Hours dropped 0.7 percent in May to a nine-month low of 40.5. The downward direction of the factory workweek over the last nine months is inconsistent with the upward movement of Minnesota’s PMI.

Adjusted weekly Manufacturing Earnings fell 0.6 percent for the second straight month reflecting lower hours.

Adjusted online Help-Wanted Ads skyrocketed in May soaring 14.8 percent. May’s jump was the second highest monthly increase since the Conference Board started publishing online help-wanted levels in 2005.  Online help-wanted volume in Minnesota as measured by the Conference Board has raced past pre-recession volume implying that labor demand is now as strong as before the recession.

Other measures of help-wanted ads suggest that labor demand remains noticeably below pre-recession levels. Online job service Monster.com publishes an online help-wanted index for the Twin Cities. Monster.com Twin Cities help-wanted index has climbed steadily since July 2009 but was still 20 percent below its October 2007 peak reading. Minnesota’s Job Vacancy Survey, conducted by Minnesota’s Department of Employment and Economic Development, also continues to show that job vacancies remain below pre-recession levels.

The survey is done twice a year, for the second and fourth quarters with results for second quarter 2011 due out in July. Job vacancies are expected to be above a year ago but not as high as 2007 second quarter levels. Demand for workers is improving as indicated by rising job vacancy and online help-wanted ads but is still below pre-recession labor demand.[1]  

Adjusted Initial Claims for Unemployment Benefits (UB) declined 5.7 percent in May slipping to the second lowest monthly total since spiking three years ago when the recession forced employers to reduce their workforce severely. Lower layoff rates coupled with increasing help-wanted ads should eventually add up to higher job growth.

[1] DEED's job vacancy survey data can be accessed at http://www.positivelyminnesota.com/apps/lmi/jvs/ChooseAreaMap.aspx

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