Minnesota Economic Indicators
by Dave Senf - firstname.lastname@example.org
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 March 2009.
Minnesota Labor Market Index
The Minnesota Labor Market Index dropped for the eighth straight month in March, but the 0.4 percent decline was much smaller than February’s 5.8 percent plunge. A positive development was improvement in two of the index’s components in the same month for the first time since August 2008. Adjusted weekly manufacturing hours jumped, and adjusted initial claims for unemployment inched down. Seasonally adjusted wage and salary employment, however, continued to slump pushing the index down to 114.3.
The national index declined 2.5 percent as all three components combined to drive the index downward for the 16th straight month. The Minnesota index is down 16.5 percent over the year while the U.S. index is off 19.8 percent.
United States Labor Market Index
Wage and Salary Employment
Minnesota’s seasonally adjusted Wage and Salary Employment declined for the seventh consecutive month in March plummeting 0.7 percent. Payrolls were slashed by 18,900 jobs as businesses continue to lay off workers to cut costs as sales and revenues slide during the recession. Goods-producing employment fell for the 16th straight month while service-providing employment shrank for the seventh month in a row. Employment crept upwards in just two supersectors — other services and government. Job cutbacks were heaviest in professional and business services, manufacturing, trade, transportation and utilities, and construction.March’s 3.4 percent unadjusted over-the-year job loss is the sixth worst over-the-year job loss on record. Only the last five months of 1982 had gloomier job loss rates. Layoffs continue at an elevated level while hiring remains subdued as the recession continues to hammer Minnesota’s labor market.
The five-year downward trend in adjusted Help-Wanted Ads in newspapers continued in March as help-wanted ads fell to an all-time low of 934. Printed help-wanted ads are down 75.3 percent from a year ago on an unadjusted basis. Minnesota’s seasonally adjusted online help-wanted ads, as reported by the Conference Board, Inc., increased for the second month in a row in March while the national count decreased 3 percent. But another online help-wanted index produced by Monster Worldwide, Inc., reported that the Twin Cities’ online help-wanted volume was down 45.1 percent from a year ago compared to a 29.3 percent drop nationally.
Purchasing Managers' Index
After seven straight months of decline Minnesota’s Purchasing Managers’ Index (PMI) recorded a gain in March jumping 9.2 percent to 31.0. While the jump qualifies as a glimmer of hope, the reading is still among the lowest on record. The index needs to head upward a few more months before it can be considered as indicating a rebound in economic growth.
Average Weekly Manufacturing Hours
Another tiny glimmer of hope that the recession may be abating is March’s 2.2 percent increase in adjusted weekly Manufacturing Hours to 38.7 hours. As with the PMI, factory hours have a long way to go to get back to pre-recession levels.
Adjusted weekly Manufacturing Earnings also climbed in March rising 1.3 percent to $696.58. Paychecks continue to trail last year’s paychecks with March’s manufacturing earnings down 1.1 percent from March 2008.
Adjusted Business Incorporations inched down in March slipping to 809. The surge in limited liability registrations continued, however, with March showing a 95.6 percent increase from a year ago. Independent contractors, responding to a new law, continue to choose to incorporate as limited liability companies (LLC) rather than register with the Minnesota Department of Labor and Industry as independent contractors.
Residential Building Permits
Seasonally adjusted Residential Building Permits, after two promising months of increasing activity, reversed directions in March dashing hopes that the home-building industry had finally hit bottom. Home-building permits plunged 48.9 percent in March down to 665 permits, the second lowest on record next to the 471 permits issued in July 2008. Home buyers are staying on the sidelines despite low mortgage rates. The inventory of unsold houses remains high leaving little incentive for new home builders to break any ground.
Initial UB Claimants
March’s adjusted Initial Claims for Unemployment Benefits were essentially flat inching down only 0.1 percent from February. The rate of layoffs, after exploding in late 2008 as the economy crashed, has at least reached a plateau. A peak in initial claims has been a reliable indicator of the economy bottoming out in past recessions. Unemployment is still expected to increase gradually for the rest of the year as there are few signs that hiring will increase or layoffs decrease in the near future even if the economy is near bottom.