Industrial Analysis

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

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

Overview

Employment in Minnesota has fallen for six consecutive months with the last four losses in excess of 10,000 including a loss of 13,300 in February. Seven of 11 supersectors saw job declines over the last month. The only substantial gain was the addition of 2,100 jobs in Educational and Health Services. Manufacturing posted the largest decline, down 5,100. Other major losses included losses of 4,200 in Professional and Business Services, 2,700 in Trade, Transportation, and Utilities, and 1,400 in Construction. Compared to last February the data showed a loss of 85,900, a decline of 3.2 percent. This was nearly equal to the 3.1 percent decline for the nation as a whole. Professional and Business Services showed the largest decline estimated at 27,600, closely followed by the 25,700 loss experienced in Manufacturing. The only supersector showing a gain over the year was the addition of 15,600 in Educational and Health Services. Minnesota shows better annual results compared to the U.S. as a whole in several supersectors including Educational and Health Services, Financial Activities, Trade, Transportation, and Utilities, and Manufacturing. Construction losses were substantially worse showing a loss of 19.5 percent compared to a 11.9 percent loss for the U.S. Losses in Professional and Business Services were also substantially worse in Minnesota.

Mining and Logging

There was no change in employment in Mining and Logging as recently announced layoffs have yet to take effect. Over the year the supersector showed a loss of 200. We should begin to see the impact of layoffs in mining taking effect in March data.

Construction

Construction employment fell by 1,400 for the month as the supersector experienced a 21st month without employment gain. The loss was essentially from weak results in specialty trade contractors. The annual loss increased to 19,000 with large declines throughout the component industries including a 21.5 percent decline in specialty trade contractors and a loss of 17.6 percent in residential building construction. There really is not much new to be said about Construction as the same trends continue. Housing construction continues to be weak, and commercial construction weakened to a near stand-still in the second half of 2008.

Manufacturing

There was a loss of 5,100 estimated in Manufacturing over the last month. This follows on the heels of a loss of 9,300 (revised) registered in January. Manufacturing employment had been generally in decline for all of 2008, but the pace of loss increased starting in November. Since that time nearly 20,000 jobs have been lost in the supersector with 13,900 of the losses in durable goods manufacturing which accounted for the vast majority of the February decline. Large declines were present in fabricated metal, computer and electronic product manufacturing, paper manufacturing, and printing and related which all showed rather weak monthly results. The very poor growth during the past four months has pushed employment losses up dramatically. The rate of annual loss registered as 7.7 percent, equal to 25,700 jobs. There are no real areas of strength to report as nearly all estimated industry groups showed substantial losses. Only two estimated industry groupings increased, the largest being a gain of 200 in electrical equipment and appliances.

Trade, Transportation, and Utilities (TTU)

After an increase of 1,800 in January (revised), Trade, Transportation, and Utilities lost 2,700 jobs for the month. The losses came in retail trade (down 1,400), and transportation, warehousing, and utilities (down 1,700) which outweighed slight gains in wholesale trade. Since last February the supersector lost 15,500 jobs with each of the major components showing declines. Retail trade lost 9,000 over the year with major losses in motor vehicles and parts dealers, food and beverage, and most other industries. The loss in transportation, warehousing, and utilities was larger than the loss in retail trade on a percentage basis, down 5.9 percent or 5,600. Retail trade has been hit hardest by the economic downturn losing 6,500 since September. During this time sales for retail and food services have declined by about 7 percent according to Census Bureau data.

Information

The loss of 700 jobs in Information erases all of the additions made in January and reflects small declines to all the estimated industry groupings. The data showed an annual loss of 500 with most of the decline in publishing industries.

Financial Activities

Financial Activities posted a decline of 600 in February as both finance and insurance and real estate and rental posted small seasonally adjusted losses. The supersector, although weaker in the second half of 2008, still shows only a slight loss compared to February 2008, down 100 jobs over the year. Much of the annual loss for the supersecter was in real estate which was down 1,300. Nondepository credit intermediation was also down 1,100, and securities-related was down about 600. The only growth came in depository credit intermediation and insurance carriers both of which showed modest annual gains.

Professional and Business Services (PBS)

Employment in Professional and Business Services has been falling consistently since early in 2008 with the losses increasing markedly from October 2008 to present. A loss of 4,200 in February continues this pattern. The monthly loss was spread to all three main component industries although the majority comes from administrative and support, down 2,700. Since September the supersector has lost 20,000 jobs. Of this loss 14,200 jobs were lost in administrative and support services which is down 16.7 percent from its May 2007 peak. The sharp downward path in monthly change has yielded the largest numeric decline among the supersectors with employment down 27,600 over the year, equal to an 8.5 percent drop. This eclipses the largest annual decline posted for the 2001 recession, down 7.1 in January 2002. The annual loss in professional, scientific, and technical services reached 6.0 percent, and administrative and support showed a decline of 15.5 percent.

Educational and Health Services

After a very small loss in January, Educational and Health Services returned to growth adding 2,100 jobs completely caused by gains in health and social assistance which was up 2,200 for the month. Educational and Health Services was the only supersector to produce annual employment growth, up 15,600. Nearly all of this growth came in health care and social assistance with gains of 4,400 in ambulatory care, 3,200 in hospitals, 3,400 in nursing and residential care, and 3,000 in social assistance. Although there have been reports of cutbacks at a number of hospitals, to this point this has not been manifested in the estimates.

Leisure and Hospitality

Employment fell for a fourth consecutive month in Leisure and Hospitality, down 900 in February. All of the loss was from weakness in accommodation and food services apparently affected by a pull-back in spending on food outside the home and hence, the declines the past few months have eclipsed the expected seasonal layoffs. The annual loss for the supersector was 9,300. Arts, entertainment, and recreation accounted for more than 40 percent of this loss. Nearly all of the remaining losses were from food services and drinking places where losses were in excess of 4,900. A major question is whether the losses of the past few months will continue as we move toward May when major seasonal employment build-ups occur or whether we will get a more normal seasonal build-up that begins from a lower level of employment.

Other Services

There was no change in Other Services employment in February. This was a nice respite after five months of decline during which time 3,000 jobs were lost. This period of weakness accounts for the annual loss of 2,800 posted for the month. Repair and maintenance and religious, grantmaking, civic, and professional organizations posted annual declines of 1,000 or greater.

Government

Seasonally adjusted data showed a very small gain of 200 jobs in Government for the month, with gains in local government erasing losses in state government. Over the past twelve months employment was down 700. As in the seasonally adjusted results, a gain in local government erased most but not all of a loss in state government education. With some key reports still missing from the sample, there may be substantial revisions during final estimation process.

* 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.