Minnesota Economic Indicators
By Dave Senf -david.senf@state.mn.us
September 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. The most recent data available are for July 2009.
Minnesota Labor Market Index
United States Labor Market Index
The Minnesota Labor Market Index (LMI), after recording one of its biggest monthly drop-offs just two months ago in May, recorded its biggest monthly jump ever in July, soaring 4 percent to 115.7. July’s surprise surge was fueled by an increase in seasonally adjusted wage and salary employment, increasing adjusted weekly manufacturing hours, and shrinking adjusted initial claims for unemployment. July’s national news was also encouraging as the U.S. LMI increased for the first time in 20 months. The uptick in both indexes suggests that the worst recession since the 1930s is losing its grip in Minnesota and across the country. The state’s labor market is likely to stabilize over the next few months as Minnesota’s economy starts to expand again.
Wage and Salary Employment
Seasonally adjusted Wage and Salary Employment rose in July for the first time since last August as the state’s employment base climbed by 7,700 workers. The 0.3 percent jump was the largest increase since June 2006, with job expansion in both the goods-producing and service-providing sectors. Goods-producing payrolls expanded for the first time since May 2007 while service-providing payrolls rose for the first time since May 2008.
Only three supersectors cut employment in July with job losses the highest in trade, transportation, and utilities, followed by job cuts in other services and in information. Job gains were highest in leisure and hospitality, educational and health services, and financial activities. July’s over-the-year job loss on an unadjusted basis fell to 3.8 percent from June’s record low of 4.1 percent. The 3.8 percent over-the-year decline translates into roughly 105,000 wage and salary jobs or about three years of average annual employment growth in Minnesota.
Help-Wanted Advertising
Adjusted Help-Wanted Ads declined again in July continuing the long-term move of job recruitment activity from newspapers to the Internet. July’s 2.3 percent slide drove printed help-wanted ads to the lowest level on record. Online help-wanted ads as compiled by the Conference Board, Inc., were essentially flat in Minnesota and nationwide in July. Minnesota online help-wanted ads have been flat for four months. Several months of rising online help-wanted ads by Minnesota employers will probably occur before the pace of hiring accelerates.
Purchasing Manager's Index
Minnesota’s Purchasing Managers’ Index (PMI) continued its heartening climb toward the 50 point reading, increasing for the fourth time over the last five months. July’s advance to 45.2 moved the index to its highest point since last July and hints at a manufacturing upturn in the state before the end of the year. Minnesota’s economy appears to be slowly pulling out of the deep contraction, but job growth like July’s spurt may not be a regular occurrence over the next few months. The economy needs to build up a lot more momentum before hiring picks up enough for sustained job growth.
Average Weekly Manufacturing Hours
Adjusted weekly Manufacturing Hours inched up to 38.5 hours in July leaving the factory workweek still well below pre-recession standards. Factory hours need to climb back over 40 hours per week before manufacturers begin to think about adding workers.
Manufacturing Earnings
Adjusted weekly Manufacturing Earnings jumped by 1.1 percent in July to $720.92, the highest monthly earnings since September 2008. Factory paychecks, however, remain far below pre-recession paychecks, which limits any rebound in spending by factory workers.
Business Incorporations
Adjusted Business Incorporations reversed a five-month skid in July as incorporations jumped 11.5 percent. Seasonally unadjusted limited liability registrations were 42 percent higher than last July but the over-the-year growth has been gradually slipping since March. June’s over-the-year increase was 53 percent.
Residential Building Permits
The good news for Minnesota’s home building industry was that seasonally adjusted Residential Building Permits fell by only 5.2 percent in July, a huge improvement over June’s 39.7 percent plunge. The bad news is that July’s 5.2 percent decline drove home building permits to the lowest monthly total dating back to 1970. The record-low level of building permits leaves little room for any hope of any sort of upswing in home building later in the year.
Initial UB Claimants
July’s 11.7 percent tumble in adjusted Initial Claims for Unemployment Benefits (UB) may be the best news among July’s indicators topping even the gain in employment. Falling initial claims translate into a declining layoff rate. If the layoff rate continues to subside, job growth can at least start to crawl even if the pace of hiring remains lackluster.
