Industrial Analysis

by Jerry Brown - jerry.brown@state.mn.us 
October 2010

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

Overview

Minnesota nonfarm employment fell precipitously in September, down 9,900 jobs from August. This decline largely erased the gains made the previous two months. Employment declined in six supersectors, five of which fell by 2,500 or more. The largest loss came in professional and business services, down 4,000. Government, and leisure and hospitality had losses of 3,800 and 3,500 respectively. Educational and health services posted a drop of 2,900 from losses in health providers. Other services was down 2,500 and, finally, mining and logging fell by 100. A number of monthly increases were substantial, including gains of 3,100 in construction, 1,400 in trade, transportation, and utilities, and 1,300 in manufacturing. Smaller gains occurred in information, up 900, and financial activities, up 200. September’s weak job growth led to a decline in the rate of over-the-year growth from 1.2 percent in August to 1.1 percent in September, equal to 27,700 jobs added. Seven of 11 supersectors posted annual growth. The largest numerical increase was in educational and health services, up 13,400. Other large increases occurred in professional and business services, up 10,400, leisure and hospitality, up 9,000, and manufacturing which added 8,700 jobs. Trade, transportation, and utilities and information showed substantial growth as well, with increases of 2,300 and 2,200 respectively. Government, construction, and other services showed losses of 5,200, 5,900, and 6,800 respectively.

Mining and Logging

Employment in mining and logging fell by 100 for the month of September, likely no more than a slight alteration of the average seasonal pattern. Over the past year the supersector showed a gain of 500 largely because of weak employment levels last year.

Construction

Following a substantial decline in August, construction employment did not experience the usual level of seasonal layoffs in September. In fact, the unadjusted data showed an increase of 0.8 percent for the month rather than the usual decline of about 2.4 percent. The result was a seasonally adjusted increase of 3,100 jobs for the month which erased the loss of 2,400 posted in August. All of the estimated component industries except heavy and civil engineering posted stronger-than-expected estimates for the month. The supersector was one of only three that still showed an annual decline with a loss of 5,900 posted for the month. All of the component industry groups showed annual declines except heavy and civil engineering which added 900 jobs. The specialty trade contractors experienced nearly all of the losses, down 5,900 since last September.

Manufacturing

Manufacturing employment increased for a fourth consecutive month on a seasonally adjusted basis adding 1,300 jobs for the month. Durable goods added 1,100 of the jobs with nearly all of the estimated component industries showing positive results for the month. Fabricated metal products and computer and electronic product manufacturing were the areas with the strongest results. Nondurable-goods manufacturing added 200 jobs for the month of September. The rate of annual growth for the supersector increased to 2.9 percent. Both durable-goods and nondurable-goods industries showed increased employment, up 3.3 percent and 2.4 percent respectively. Areas showing the strongest growth were fabricated metal, computer and electronic, and food manufacturing. Large annual job loss continued to affect paper manufacturing and printing and related.

Trade, Transportation, and Utilities

After falling for the previous three months, trade, transportation, and utilities gained 1,400 jobs for the month. All of this gain came in transportation, warehousing, and utilities with 3,100 additions. The sharp rise reversed losses the past two months and in large part reflects larger-than-usual seasonal swings among seasonal industries like school bus companies. Retail trade posted a fairly substantial loss of 1,500 in large part caused by weak results among general merchandise stores. Wholesale trade was down 200 jobs for the month. Compared to September 2009, the supersector added 2,300 jobs. Wholesale trade added 1,600 jobs the past year mainly with increases in durable-goods wholesaling. Retail trade was up 2,900 annually, mainly owing to increased employment at general merchandise stores. Many retail industries still show an over-the-year loss including food and beverage stores and motor vehicle and parts dealers. Despite its strong performance in September, transportation, warehousing, and utilities showed a loss of 2,200 compared to last year. All of the loss came in transportation and warehousing where employment was weaker, compared to last year, across all component industries.

Information

Information posted a second consecutive month of employment gain, up 900. Nearly all of this gain came from industries for which estimates are not available, although there were improvements in publishing and telecommunications industries as well. The growth for these past two months has pushed annual growth for the supersector to 2,200 as of September. Nearly all this growth has occurred in industries outside of publishing and telecommunications.

Financial Activities

A gain of 800 in finance and insurance was sufficient to erase losses in real estate and rental and leasing and to produce a monthly increase of 200 jobs for the supersector. Compared to a year ago, employment was down 900. Much of this loss was in real estate and in securities, commodity contracts, and related. Gains came largely from insurance carriers and related activities.

Professional and Business Services 

Following substantial gains in July and August, employment in professional and business services fell 4,000 over the month of September. The largest part of this loss came in administrative and support services, which was down 3,400 for the month. Small losses also came in management of companies and in professional and technical services. The supersector showed a gain of 10,400 over the past 12 months. All of these annual gains came in administrative and support which added 11,400. The majority of the gains came in employment services, which was up 16.7 percent annually. Management of companies weakened in September with annual change moving to -0.7 percent. Professional, scientific, and technical services also declined about 500.

Educational and Health Services

Employment fell 2,900 in educational and health services over the month of September. There were losses in both the major components. Private education fell by 800 jobs with the losses coming outside private primary and secondary schools and private colleges. The larger share of the loss was in health care and social assistance with a loss 2,100. This was the first loss in health care and social assistance since March. The loss reflected a general weakness in the component industries. In particular ambulatory health care services and nursing and residential care facilities showed very weak results for the month. Compared to last year the supersector posted a gain of 13,400, the largest annual gain of any supersector. Nearly all of the component industries show annual growth. The largest increases were in social assistance, up 4,400, private colleges and universities, up 3,800, and nursing and residential care facilities, up 3,100.

Leisure and Hospitality

Leisure and hospitality employment experienced a monthly loss for a second consecutive month in September shedding 3,500 jobs following a drop of 2,400 in August. Most of the monthly loss was in accommodation and food services which lost 3,000 as food services and drinking places experienced very weak growth for the month, particularly in limited-service eating places. Arts, entertainment, and recreation employment also fell, down 500 for the month. Over the past year the supersector added 9,000 jobs with the vast majority of growth coming in food services and drinking places. Every area of the supersector, however, added jobs with gains of 1,200 in amusement, gambling, and recreation and 500 in accommodation.

Other Services

Other services lost 2,500 jobs in September. Most of the loss was concentrated in religious, grantmaking, civic, professional, and related industries. Over the past year the estimates show a loss of 6,800 jobs for the supersector with all three major component industries showing large declines.

Government

Government employment was down 3,800 in September. Local government was down 4,800 jobs as local government education saw reduced seasonal hiring and non-education local government saw increased seasonal layoffs from what were very strong summer buildups. Federal government dropped again as temporary Census workers continued to be let go. State government was up 1,700 to offset some of these losses. Over the past year the supersector showed a loss of 5,200. Nearly all of this loss was in local government education where employment was off 4,800. Federal government lost about 400 jobs, and state government showed a gain of about 400. The loss in local government was expected given the stream of reports about cutbacks in school budgets since last spring.

* 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.

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