Minnesota Economic Indicators
by Dave Senf - david.senf@state.mn.us
October 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.
Minnesota Labor Market Index
United States Labor Market Index
The Minnesota Labor Market Index (LMI) dipped 0.7 percent in August after surging in July. Slipping seasonally adjusted wage and salary employment and a moderate jump in adjusted initial claims for unemployment pushed the index down. A jump in adjusted weekly manufacturing hours moderated the index’s retreat. After recording its first advance in 20 months in July the U.S. index slid 1 percent in August. Both indices seem to have bottomed out over the last few months after entering into a free fall back in September 2008. The recent bottoming out by the indices signals that the recession probably ended sometime over the last few months. The labor market will take longer to rebound, but the economy is expanding again after having contracted for four straight quarters. Minnesota’s LMI is down 14.6 percent since last August while the U.S. index is off 17.4 percent over the same time period.
Wage and Salary Employment
Seasonally adjusted Wage and Salary Employment reversed directions in August declining 6,300 jobs. The goods-producing sector shed 1,100 jobs while the service-providing sector cut 5,200 jobs. Most of the workforce reduction occurred in leisure and hospitality; trade, transportation and utilities; and the manufacturing sectors. Jobs were added in five sectors with professional and business services leading the way. Minnesota’s over-the-year wage and salary employment decline reached 4.2 percent. The 4.2 percent annual drop topped June’s 4.1 percent drop as the largest on record. Wage and salary employment nationally was down 4.4 percent from a year ago.
Help-Wanted Advertising
Adjusted Help-Wanted Ads slipped a few more notches in August sliding to an all-time low of 803. Printed help-wanted ad levels have flattened out over the last few months. Online help-wanted ads as compiled by the Conference Board, Inc., had been flat over the last few months but jumped 7.7 percent in Minnesota in August. Online help-wanted ads nationally jumped 5.5 percent. Hiring may be inching up, but as of August the number of job openings remains dismal. The economy will have to gain a lot more momentum before job openings and help-wanted ads show sustained gains.
Purchasing Managers' Index
Minnesota’s Purchasing Managers’ Index (PMI) surged in August bursting through the growth-neutral 50 mark with a heartening 58.0 reading. This is the highest reading since July 2007 and signals that Minnesota’s manufacturers are expanding production again and will continue to expand output over the next few months. A three-or four-month string of 50-plus PMI readings for the state will signify that the state’s manufacturing sector is gaining traction as the manufacturing rebound gains strength.
Average Weekly Manufacturing Hours
Adjusted weekly Manufacturing Hours jumped by an hour in August increasing to 39.5, the longest factory workweek since last October. The longer workweek provides additional evidence that Minnesota’s manufacturing sector may have bottomed out. The question is no longer when the rebound will arrive but how strong will it be.
Manufacturing Earnings
Adjusted weekly Manufacturing Earnings also surged in August swelling to $737.85. This is the fattest factory paycheck since June 2007 and is another encouraging indicator as higher paychecks eventually turn up as rebounding consumer spending.
Business Incorporations
Adjusted Business Incorporations have zigzagged over the last two months increasing 9.1 percent in July but sliding 8.2 percent in August. Seasonally unadjusted limited liability registrations, however, continue to run ahead of last year with August’s level 29 percent higher than a year ago. Small business credit reportedly still remains tight and is hampering small business startups.
Residential Building Permits
After months of dismal home building news the 97.5 percent jump in seasonally adjusted Residential Building Permits to 734 is a welcomed development. The 734 level is still way below any level that might be considered normal but is the highest in six months. Hopefully the summer of 2009 will eventually be known as the bottom of the Great Housing Collapse. Minnesota’s economic recovery will be moderate without some sort of home-building rebound.
Initial UB Claimants
Seasonally adjusted Initial Claims for Unemployment Benefits (UB) headed the wrong way in August climbing 4.3 percent to 8,570. The increase is a reminder that layoff rates are still high and that the job market is still extremely weak. Minnesota’s economy may be showing some early signs of a rebound, but, as with all recessions, employment is lagging behind.
