Minnesota Economic Indicators

by Dave Senf - david.senf@state.mn.us
October 2010

Note:  All data except for the PMI has been seasonally adjusted.  Residential building permits data are current through August while all other indicators are current through September. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.
 

The Minnesota Index advanced for the 12th consecutive month in September, but the 0.1 percent increase indicates that Minnesota’s recovery from the 2007 – 09 recession lost momentum over the summer. After averaging 0.4 percent monthly gains during the first half of the year, the index has averaged 0.1 percent monthly gains over the last three months. The U.S. index has slowed more than Minnesota’s index, recording no change for the third month in a row. Minnesota’s index is 0.8 percent below its pre-recession peak while the U.S. index is 5.3 percent short of its pre-recession peak. Minnesota’s recovery has slowed over the last few months but continues to run ahead of the nation’s slow-motion recovery.

Minnesota’s seasonally adjusted Wage and Salary Employment suffered its biggest setback since job growth resumed a year ago, declining 0.4 percent or 9,900 jobs in September. The goods-producing sectors added 4,300 workers, but service-providing sectors cut 14,200 workers. The job rebound has been bumpy with job growth recorded in only six of the last 12 months. Since last September the state’s wage and salary employment base has climbed by 35,000 jobs based on seasonally adjusted employment numbers.

An unexpected jump in construction employment combined with increasing manufacturing hiring boosted goods-producing employment. The increase of 3,100 construction jobs was the largest monthly gain for this sector since April 2005. Employment also increased moderately in trade, transportation, and utilities and in information. Job cutbacks were heaviest in professional and business services, government, leisure and hospitality, educational and health services, and other services. Government employment’s decline was related to Census worker layoffs and reduced payrolls at public schools across the state.

 Adjusted online Help-Wanted Ads climbed for the third straight month rising to the highest level since October 2008. The slow-but-steady climb in online help-wanted ads indicates that hiring should continue to improve gradually over the next few months. Minnesota’s over-the-year increase in online help-wanted ads reached 51.9 percent in September, far ahead of the 28.2 percent national gain. Only North Dakota has seen online help-wanted ads increase faster than Minnesota. Minnesota’s job growth should continue to outpace the nation based on the expanding volume of help-wanted ads.

The Minnesota’s Purchasing Managers’ Index (PMI) dipped for the third consecutive month suggesting that the state’s manufacturing activity will continue to expand during the second half of 2010 but at a slower rate than the first half. Minnesota’s PMI continues to exceed the national counterpart, 58.9 versus 54.4. Minnesota’s higher reading is another signal that Minnesota’s job growth will continue to outpace the national rate for the rest of the year.

Adjusted weekly Manufacturing Hours recovered to 40.7 hours in September matching the highest level since the recession. Manufacturing hours have been relatively flat over the last five months which is consistent with a shift downward in the manufacturing rebound. Manufacturing is still expanding, but the pace has slowed.

Adjusted weekly Manufacturing Earnings ticked up 0.4 percent in September to $750.51 after a big drop in August. Factory paychecks have shrunk since earlier in the year and are way below pre-recession paychecks.

Adjusted Business Incorporations dropped 3.4 percent in September to 553. Traditional business incorporations have remained essentially flat since the beginning of the year while registrations of limited liability companies (LLC) have started to climb with 1,997 LLCs registering in September.

Seasonally adjusted Residential Building Permits jumped up for the second month in a row hiking 29.5 percent in August. The robust two-month uptick in permits, however, only pushed permits to 755, which is still way below the 40-year average of roughly 2,200 permits per month. The home-building industry needs another four or five months of robust permit hikes similar to the last two months before any talk of a housing rebound is warranted.

Adjusted Initial Claims for Unemployment Benefits (UB) inched down in September breaking a troublesome four-month upward trend. Hiring has been slowly increasing in Minnesota helping to lift job growth, but stubbornly high initial claim numbers, evidence of continual layoffs, have held job growth down. The 32,409 initial claims filed in September are roughly 40 percent higher than the pre-recession monthly average experienced in 2006
and 2007.

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