Minnesota Economic Indicators
by Dave Senf - david.senf@state.mn.us
November 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 Minnesota Labor Market Index rose for the second time in three months jumping 0.6 percent in September to 116.1. This was propelled by declining adjusted initial claims. Falling adjusted wage and salary employment and weekly manufacturing hours, however, slowed the increase. The U.S. index also increased for the second time in three months advancing 0.3 percent. Both indices seem to have bottomed out in June, which is consistent with the notion that the recession may have ended in June or July.
Minnesota’s index has improved 3.9 percent since June while the U.S. index is up 1 percent suggesting that Minnesota’s economic recovery may be a step ahead of the national recovery. Minnesota’s recovery, like the U.S. recovery, is expected to be a long and bumpy road as evidenced by the job market which has yet to turn the corner.
Minnesota Labor Market Index
United States Labor Market Index
Seasonally adjusted Wage and Salary Employment declined in September for the second straight month and for the 12th time over the last 13 months. September’s 5,100 job decline was a bit unusual as job cutbacks were concentrated in the service-providing sectors. Goods-producing payrolls increased for only the second time in two years with manufacturing recording its highest monthly job gain since June 2006. The trade, transportation, and utilities sector added the most jobs, but job cuts were high in the leisure and hospitality, government, and educational and health services sectors. The 4.4 percent over-the-year job decline recorded in September using unadjusted employment is an all-time-record drop underscoring the historical steepness of job loss since the financial meltdown last year. The worst over-the-year drop during the double-dip recession years of the early 1980s was 3.9 percent in September 1982.
Wage and Salary Employment
Adjusted Help-Wanted Ads slipped again in September declining for the fourth month in a row to another record low of 711. The market for print help-wanted ads has all but disappeared. Hiring has moved to the Internet where Minnesota’s online help-wanted ads, as compiled by the Conference Board, Inc. decreased by 5.1 percent in September on a seasonally adjusted basis after having jumped by 7.7 percent in August. Online help-wanted ads nationally dropped 2 percent. Online help-wanted ads have been relatively flat since April following a steep plunge that began last November. The flatness over the last six months is consistent with the weak level of hiring. Any pickup in hiring is likely to be preceded by a few months of rising online help-wanted ads.
Help-Wanted Advertising
Minnesota’s Purchasing Managers’ Index (PMI) slipped slightly in September but remained well above the growth-neutral 50 mark. September’s 55.4 PMI suggests that Minnesota’s manufacturing sector will be expanding over the near term. The modest manufacturing rebound needs to gain strength before any durable rebound in factory employment occurs.
Purchasing Managers' Index
Adjusted weekly Manufacturing Hours, after increasing over the previous two months, slipped in September dropping 0.7 percent. Minnesota’s manufacturing sector is growing again, but the recovery is, for now, modest.
Average Weekly Manufacturing Hours
Adjusted weekly Manufacturing Earnings, however, continued to swell increasing 1.2 percent in September. September’s $748.84 average factory paycheck was the highest since April 2007. Any increase in wages is welcome news as increased wages will eventually help boost consumer spending.
Manufacturing Earnings
Adjusted Business Incorporations zigzagged again in September climbing 5.6 percent. Unadjusted limited liability registrations continue to run ahead of last year with September’s level 27.5 percent higher than a year ago. This is largely from a change in state law concerning independent contractor certification. Unemployed workers may be turning to self-employment given the poor job market, but business startup data is too problematic to detect any trend.
Business Incorporations
After jumping 96.8 percent in August, Minnesota’s seasonally adjusted Residential Building Permits declined in September by 27 percent. September’s unadjusted residential building permits were 31.3 percent lower than a year ago.
Residential Building Permits
After a modest uptick in August, seasonally adjusted Initial Claims for Unemployment Benefits resumed their downward drift in September, dropping 5.3 percent, indicating that the pace of layoffs continues to decline. But the job market remains weak as the initial claims level remains substantially higher than a year ago just before the economy tanked. September’s unadjusted initial claim numbers were 51.1 percent higher than in September 2008.
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