Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
March 2009

Note: Except for the Minnesota Labor Market Index, the U.S. Labor Market Index, and the PMI, all over-the-year data are seasonally unadjusted. The most recent data available are for January 2009.  

Minnesota Labor Market Index

After four months of steep decline the Minnesota Labor Market Index unexpectedly inched upward in January despite another month of declining seasonally adjusted wage and salary employment and falling adjusted weekly manufacturing hours. The index’s plunge was stopped by a drop in initial claims for unemployment which pushed January’s index up 0.1 percent to 121.3. There was no pause or uptick for the national index as it lost ground for the 14th consecutive month. Minnesota’s index was down 11.6 percent from a year ago while the U.S. index was down 15.4 percent. January’s small increase, while welcome, is probably fleeting as most indicators point towards a state economy that is still being battered by the ongoing deep national recession.

United States Labor Market Index

Wage and Salary Employment

Minnesota’s seasonally adjusted Wage and Salary Employment took another big hit in January with the loss of 18,500 jobs. Goods-producing employment was down for the 14th straight month while service-producing employment slipped for the fifth consecutive month. Job layoffs occurred in seven of the 11 supersectors, remained flat in Natural Resources and Mining, and increased in Trade, Transportation, and Utilities, Financial Activities, and Information. Job losses were highest in Manufacturing, Government, Leisure and Hospitality, and Construction. Construction employment has tumbled by 25.6 percent from its peak in February 2006. January’s 2.7 percent unadjusted over-the-year job loss was the worst monthly over-the-year decline since December 1982. Nationwide over-the-year job loss in January slipped 2.6 percent.

Help-Wanted Advertising

Adjusted Help-Wanted Ads in newspapers tumbled to another record low in January sinking to 1,055. January’s unadjusted 970 newspaper help-wanted ads were 76.6 percent short of last January’s total. Minnesota’s online seasonally adjusted help-wanted ads as reported by the Conference Board, Inc., were 13.8 percent below December’s level, a decline right in line with the nationwide drop of 13.1 percent. January’s unadjusted index of online help-wanted ads for the Twin Cities area produced by Monster Worldwide, Inc., was down 34.8 percent from last January compared to the 26.2 percent national decline. The downward online help-wanted trend suggests that the job picture, both in Minnesota and nationwide, will continue to deteriorate through at least the first half of 2009.

Purchasing Managers' Index

Minnesota’s Purchasing Managers’ Index (PMI) continued to weaken in January declining for the sixth straight month. January’s 30.1 reading, a record low in the index’s 15-year history, points toward further contraction for Minnesota’s economy over the next few quarters.

Average Weekly Manufacturing Hours

Adjusted weekly Manufacturing Hours staggered downward for the sixth straight month in January falling to 38.6 hours as Minnesota manufacturers respond to falling orders by cutting back production. January’s weekly manufacturing hours ranks as the third lowest monthly average with only January 1982 and April 1983 recording weaker weekly hours.

Manufacturing Earnings

Adjusted weekly Manufacturing Earnings inched down to $704.85 in January, a 0.1 percent drop from the previous month. Factory paychecks continue to hold up relatively well compared to the 1990-91 and 2001 recessions. During those recessions real manufacturing earnings fell to the $660 to $680 weekly range.

Business Incorporations

Adjusted Business Incorporations jumped again in January sending business incorporations up to 968, the highest monthly total since May 2006. Limited liability registrations also recorded a big jump for the second straight month, surging 127.4 percent from a year ago. The sudden surge in business incorporations and formation of limited liability companies is related to the new certification requirement of independent contractors which became law in January.

Residential Building Permits

Seasonally adjusted Residential Building Permits, after ending 2008 on a low note in December, started 2009 on a high note with permits jumping 85 percent in January. January’s adjusted 1,519 building permits were the highest since July 2007. On an unadjusted basis, home-building permits were 64.5 percent higher than a year ago. This is the first bit of promising news for home building activity in a long time but far from any robust rebound. Home building activity is unlikely to show any sustained recovery until the economy improves.

Initial UB Claimants

The most promising indicator in January was a 6.1 percent drop in seasonally adjusted Initial Claims for Unemployment Benefits (UB). January’s decline to 8,519 weekly average initial claims may be a sign that the rate of layoffs is slowing, but the unemployment rate will continue to head up as long as layoffs remain high and the pace of hiring low.