Industrial Analysis

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

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

Overview

October estimates showed a modest 2,200 increase in employment for Minnesota on a seasonally adjusted basis. This is the second increase posted in the past six months, the last being in July. Although positive, the monthly results showed a very mixed bag in terms of supersector employment. On the positive side, large gains occurred in professional and business services, up a robust 5,500, followed by educational and health services, up 3,700, leisure and hospitality, up 1,700, and government with an increase of 1,600. This was offset by losses of 4,900 in trade, transportation, and utilities, 4,500 in manufacturing and 1,100 in construction. Over the past year employment has fallen 4 percent, equal to 110,500 jobs. On a percentage basis, the state matched the loss posted for the U.S. as a whole. Only educational and health services showed an annual gain, adding 11,700 jobs. Manufacturing was by far the area with the largest loss, down 41,300 or 12.3 percent over 12 months. Although somewhat improved the past two months, professional and business services still showed a loss of 25,400. Other large declines occurred in trade, transportation, and utilities, construction, and leisure and hospitality.

Mining and Logging

There was no change in mining and logging employment over the month. Following some call-backs to iron mines the past two months, over-the-year growth has improved from -32.2 percent in July to -20.1 percent in October. The net effect is 1,300 fewer jobs than one year ago.

Construction

Construction employment fell 1,100 over October, with most of the losses coming in specialty trade contractors. There has been some improvement in construction employment yielding a few monthly gains since April. Nonetheless the October data again show a substantial loss. Compared to year-ago data, construction employment was down 11.8 percent in October. The rate of over-the-year loss has been gradually improving since June when annual loss measured 15.9 percent. Losses in residential building construction were still disproportionately high, down 28.5 percent or 3,400 jobs. The majority of cuts were in specialty trade contractors where employment was down 8,500. Heavy and civil engineering construction showed only a slight decline.

Manufacturing

Durable- and nondurable-goods manufacturing each saw a monthly employment decline measuring 1.5 percent in October. The result was a monthly loss of 4,500 for the supersector. The decline was a little surprising given that the Minnesota-specific business conditions index produced by Creighton University has been in positive territory for a number of months. Durable goods showed a monthly decline of 2,800. Wood product and miscellaneous manufacturing were the durable-goods industries showing particular weakness for the month. Nondurable-goods manufacturing lost 1,700 jobs. Most of this loss was in industries for which we do not produce estimates although paper manufacturing and printing and related showed weak results. The annual loss for the supersector registered 12.3 percent, a decline of 41,300 jobs. About 80 percent of the loss came in durable-goods manufacturing, where every estimated industry grouping showed an annual loss, with very substantial losses in machinery, computer and electronic product, fabricated metal, and wood product manufacturing.

Trade, Transportation, and Utilities (TTU)

Employment in trade, transportation, and utilities posted a seasonally adjusted loss of 4,900 in October. The locus of most of the supersector decline was retail trade where employment fell by 4,200. A very large part of this decline came in general merchandise stores where seasonal holiday hiring was below usual levels. This is in line with press reports of retailers curtailing their seasonal hiring this year. Food and beverage stores also saw somewhat weak results. The other losses for the supersector were in transportation and warehousing, which continues to shrink with reduced business and personal travel and lower levels of goods transporting. The rate of over-the-year change was -4.3 percent, equal to the September rate. Transportation and warehousing was down 10.4 percent or 8,600, including a loss of 9.1 percent in truck transportation. All three components in wholesale trade showed substantial declines to cause a total loss of 6,700 for wholesalers. On a percentage basis retailing was down 2.6 percent, slightly worse than the -2.4 percent mark in September. Motor vehicle and parts dealers, food and beverage stores, and general merchandise stores were the areas accounting for most of the losses.

Information

Information saw a small increase in October, up 300 jobs. Compared to a year ago the supersector’s employment was down 2,500. While publishing industries and telecommunications showed losses, most of the annual decline came from industries for which estimates are not produced.

Financial Activities

There was an increase of 200 in the financial activities supersector with the growth coming from real estate and rental and leasing. Compared to last October, employment fell by an estimated 1,700. Finance and insurance was down approximately 700 with the remainder from real estate and rental and leasing. Insurance carriers, long a source of strong growth, showed an annual gain of less than 200, well down from the annual gain of more than 1,300 in January 2009.

Professional and Business Services (PBS)

A large gain in administrative support and waste management created a job increase of 5,500 in the supersector as a whole. Most of the growth came from employment services. During the last recession, growth in administrative and support and waste management was among the first industries to show improvement. There were minuscule over-the-month losses in the two other major components of the supersector. On an annual basis the supersector showed a loss of 7.7 percent. This is a substantial improvement from the -10.1 percent posted in August. There were large declines in all three major components over the past 12 months. Professional, scientific, and technical services was down 7.9 percent, management of companies was off 6.6 percent, and administrative support and waste management fell by 6.2 percent.

Educational and Health Services

Employment in educational and health services added 3,700 jobs over the month. This was largely the result of gains in private education, particularly private colleges and universities. Hiring for the new school year appears to have occurred somewhat later as seen by the loss of 3,800 in September followed by a gain of 3,200 in October. Health care and social welfare added 500 jobs, essentially all in nursing and residential care facilities. Growth over the past year equaled 11,700 or 2.6 percent, up slightly from September. All of the annual increase was in health care and social assistance, which added 11,900 jobs. All four major components of health care and social assistance showed annual growth, but hospital employment has weakened in recent months to the point that the annual increase was only about 100 in October.

Other

Other services was down 300 for the month of October. On an annual basis the supersector posted a loss of 2.4 percent with the largest part of the loss coming in repair and maintenance services.

Government

Government showed an increase of 1,600 in October after posting a loss of 3,100 in September (revised). This pattern resulted from weak September results and an increase in October in local government. The October annual change gives us a clear picture now that school hiring is completed. The supersector was down 2,300 since October 2008. State government was down 1,700 with all of the loss in state government education. Local government education was down by 2,400 the past 12 months and outweighed increases in other areas of local government to produce a net loss of 1,000 in local government as a whole.

* 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.