Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
November 2011

Note:  All data except for the Minnesota Index, U.S. Index, Minnesota Leading Index, and PMI have been seasonally adjusted.  Minnesota Leading Index data are current through September  2011 while all other indicators are current through October 2011. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.
 

The Minnesota Index slipped for the first time in 18 months in October signaling a slowdown in the state’s economic growth. Payroll employment has decreased over the last two months, the first consecutive job declines since late 2010. Minnesota’s growth, after having outpaced national growth from May through August, fell slightly behind over the last two months.  The U.S. index climbed 0.2 percent in October compared to Minnesota’s 0.1 percent drop. The Minnesota Index is up 2.6 percent from a year ago while the U.S. Index is 2.8 percent higher. Thirteen states had higher over-the-year increases than Minnesota.

Minnesota’s adjusted Wage and Salary Employment stumbled for the second straight month in October although some of the sting was lessened by September’s decline being revised downward. The goods producing sector added 1,100 jobs while the service providing sector cut 7,200 jobs leaving October wage and salary employment 6,100 jobs short of September’s total.    Job loss was heaviest in educational and health services, leisure and hospitality, financial activities, trade, transportation, and utilities, and other services. The 3,000 educational and health services job reduction was the largest monthly decline recorded by this sector over 21 years of data. Payrolls expanded only in professional and business services, construction, and information.  

Over-the-year job growth dipped below 1 percent for the first time in five months in October. October’s 0.7 percent annual growth lagged the 1.1 percent national increase.

The Minnesota Leading Index was virtually unchanged in September remaining at a level not seen since mid-2004. The robust leading index level points towards an acceleration in Minnesota’s economy over the next six months. Minnesota’s 2.49 reading was the fourth highest among states and substantially above the 1.45 reading for the U.S.

The Minnesota’s Purchasing Managers’ Index (PMI) inched up in October to 55.4 which is safely above the growth neutral value of 50. The above-50 reading indicates that Minnesota manufacturers expect production to continue to increase over the next few months. The national index and Mid-American index both dropped in October, tailing off to 50.8 and 49.9 respectively. Minnesota’s sub-national growth in October as measured by the Minnesota Index is inconsistent with most of the other indicators which outperformed their national counterparts.

Adjusted Residential Building Permits slipped slightly in October keeping permit levels dragging along the bottom. Minnesota’s home building industry continues to be pretty much dead in the water even though the state’s job picture has improved moderately over the last year.

Adjusted weekly Manufacturing Hours inched down in October sliding to 41.0 hours but remain elevated from a mid-year slump. The U.S. factory workweek increased modestly to 40.5 hours.

Manufacturing Earnings increased slightly in October to $780.63 as the price indices used to adjust paychecks to real dollars dipped in October. Real manufacturing earnings have been down compared to a year ago in seven out of the last eight months.  October’s 3.9 percent drop from a year ago is the largest year-over-year decrease since June 2008.

Adjusted online Help-Wanted Ads in Minnesota broke a three-month decline in October with ads climbing 2.6 percent. Online job ads nationwide fell for the fifth straight month in October sliding 0.3 percent. Minnesota’s share of national online help-wanted ads reached 2.5 percent last month, the highest level ever in the six-year series. These suggest that labor demand is higher in Minnesota than nationally and that the state’s job growth should surpass the national growth in the near term.

Adjusted Initial Claims for Unemployment Benefits (UB) inched up in October, rising 1.0 percent, but remained at levels associated with solid job growth. Initial claims have averaged roughly 23,800 per month this year when the July spike related to the state government shutdown is excluded. Initial claims averaged slightly lower levels in 2005 and 2006 when annual job growth reached 1.3 and 1.6 percent, respectively. Annual job growth for 2011 looks like it will be around 1.0 percent. Layoff rates as measured by initial claims have returned to pre-recession levels. An uptick in hiring rates has to occur to push the state’s job growth back up to the 1.3 – 1.6 range.

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