Industrial Analysis

by Jerry Brown
November 2011

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

Overview

Minnesota nonfarm employment fell 6,100 in October, marking a second consecutive month of job loss.  The loss was the fourth month of decline out of the first 10 months of 2011. Seven of 11 supersectors posted losses for the month with the largest decline posted in educational and health services, down 3,000. Leisure and hospitality posted a loss of 2,000 followed by losses of 1,600 in financial activities and 1,500 in trade, transportation, and utilities. Professional and business services added 2,200 for the month, and construction rode the warm October weather to a gain of 1,700. The rate of annual growth slowed in October to 0.7 percent, down from 1.3 percent in September. The strongest gains continued to be in professional and business services, up 6,500, and educational and health services, up 6,300.  Manufacturing, leisure and hospitality, and trade, transportation, and utilities added 3,800, 3,600 and 2,400 jobs respectively. There were two over-the-year losses of note: Government showed a decline of 3,100, and other services saw a significant reversal of fortune to post a loss of 1,500.

Mining and Logging

Mining and logging showed no change in employment in October. Over the past six months the supersector lost a net 300 jobs. The supersector was up 100 jobs compared
to 2010.

Construction

Aided by warm and dry weather in October, construction employment increased 1,700 for the month.  The vast majority of the gain came in specialty trade contractors. This strong performance helped push annual growth into positive territory for the first time since April 2006, with an estimated gain of 900 posted in October. At this point the annual gain is coming in construction of buildings, but there has been improvement in the other areas including specialty trades which is very close to showing over-the-year growth. There is no indication that housing construction is anywhere close to seeing an improvement.  Housing starts for the first 10 months of 2011 are down substantially compared to 2010. While construction employment has improved, it is important to note that the current estimate was the lowest October count since 1995.

Manufacturing

A substantial loss of 1,300 in nondurable goods manufacturing led to a decline of 600 for the supersector. The losses were driven largely by changes in food manufacturing. This was the second consecutive monthly loss in nondurable goods manufacturing. A gain of 700 in durable goods manufacturing offset a large part of this loss. The growth in durable goods came largely from fabricated metal and machinery manufacturing. Over the past year the supersector added 3,800 jobs.  All of the growth was in durable goods manufacturing, up 4,600. Fabricated metal product and machinery manufacturing showed gains of 1,800 and 1,700, respectively. The Minnesota Business Conditions Index was 54.4 marking the 27th consecutive month that the index was above the break-even point of 50. This indicates conditions for slow job growth for the next three to six months.

Trade, Transportation, and Utilities

Employment in trade, transportation, and utilities declined 1,500 for the month, following a loss of 5,400 in September (revised). Wholesale trade posted a decline of 1,100 as nondurable goods wholesaling fell substantially. Transportation, warehousing, and utilities was down 1,700 following a loss of 2,600 last month as the seasonal job growth in transportation has been well below expectations this fall. The bright spot was retail trade with a gain of 1,300 for the month, which comes on the heels of two months of very slight losses. The source of retail gains was largely general merchandise stores, motor vehicle and parts dealers, and gasoline stations. Early reports indicate companies expect holiday hiring roughly on par with last year. Consumer spending has held up in recent months despite slow income growth. However, spending has been sustained by reduced saving, begging the question of the long-term viability of current consumption without some additional income in the months to come. Over the past year the supersector added 2,400 jobs. The majority of gains came in wholesale trade with a gain of 2,100, with strong growth in durable and nondurable goods wholesaling. Retail trade added a very modest 900 jobs, largely from general merchandise and food and beverage stores. These gains were partly offset by a decline of 600 in transportation and warehousing which has posted weak seasonal hiring the past two months.

Information

For the first time since May the information supersector posted a monthly job gain, up 500 in October. There was a slight gain in telecommunication, but most of the monthly gain came from industries outside traditional publishing and telecommunications. Over the course of the last 12 months the supersector lost 800 jobs with most of the loss accounted for by reductions in traditional publishing industries.

Financial Activities

Financial activities employment saw a significant loss of 1,600 jobs in October, more than erasing the 1,400 jobs added in September. The majority of the monthly decline came in real estate and rental and leasing with a loss of 1,000. This was the third consecutive month of decline for the sector. Finance and insurance was down 600 for the month as credit intermediation showed somewhat softer results for the month. Over the past year the supersector was estimated to have added 1,100 jobs with nearly all of the gains coming from insurance carriers where 3,100 jobs were added. Insurance has been the primary source of job gains in the supersector for 2011. Erasing most of these gains was a loss of 2,500 in real estate and rental and leasing which has not seen annual growth in more than five years.

Professional and Business Services

Professional and business services provided one of the rare positive notes in the October estimates, with an estimated 2,200 jobs added for the month. The increase came mainly from administrative and support services, up 2,300 for the month, which more than offset the losses of the previous two months. Professional, scientific, and technical services also added 700 for the month, marking a third consecutive month of gains for that sector. Management of companies posted its largest monthly loss of the year, down 800. Compared to last year, the supersector was up 6,500 with most of the increase coming in professional, scientific, and technical services where 4,000 jobs were added, particularly in computer systems design and related services.  Gains of 3,600 in employment services led to a gain of 2,200 in administrative and support services. Management of companies has weakened in recent months and showed a gain of 300.

Educational and Health Services

There was a loss of 3,000 in educational and health services. All of the decline was in private education where employment fell by 3,800, as the seasonal build-up at colleges and universities was well below usual for the month. Healthcare and social assistance added 800 with gains in hospitals and ambulatory care leading the growth. Over the past year the supersector showed a gain of 6,300. All of this increase came in healthcare and social assistance with a gain of 8,500 largely from ambulatory health care, up 5,300, and nursing and residential care, up 2,500.

Leisure and Hospitality

Employment in leisure and hospitality fell for a third consecutive month, down 2,000 jobs. All of the loss came from accommodation and food services with a loss of 3,100. Over the past three months accommodation and food services has lost 9,600 jobs. Despite the substantial decline the past three months, the supersector still showed a gain of 3,600 over the past year with all the increase coming in accommodation and foods services.

Other Services

A loss of 1,000 in other services for October erased most of September’s gain of 1,400. The monthly loss came from declines in personal and laundry services. Over the past year the supersector continued to show a loss, down 1.2 percent.

Government

Government employment was down 800 in October following a gain of 8,100 in September.  The loss was mainly caused by slower than expected growth in local government educational services. A much larger portion of hiring for the school year in local government education occurred in September resulting in the negative impact in October. Over the past year government employment was down 3,100. These losses came in local government education, non-educational state government, and federal government.

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