Industrial Analysis

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

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

Overview

Employment grew by 600 jobs in August mainly from increases in the professional and business services supersector. This gain followed the large 9,600 increase that occurred in July (revised). Five of 11 industry supersectors showed monthly gains. In addition to a gain of 4,900 in professional and business services, substantial gains were also posted in educational and health services and in information, up 1,900 and 1,400 respectively. The gains were enough to offset large losses of 3,500 in trade, transportation, and utilities, 2,500 in construction. and 1,800 in leisure and hospitality. The rate of over-the-year growth ticked up 0.1 percent to 1.2 percent. Employment in leisure and hospitality was up 14,600 compared to last year representing the largest numeric growth but also the highest rate of increase at 5.8 percent. Seven of 11 supersectors showed annual increases. Other large gains included a 13,400 in professional and business services, 12,200 in educational and health services, and 5,600 in manufacturing. Construction continued to show a large loss, down 8,100. The other services supersector was off 5,100 followed by losses of 1,800 and 1,200 in trade, transportation, and utilities and in financial activities, respectively.

Mining and Logging

Mining and logging saw an increase of 100 jobs for a second consecutive month. The estimates showed a gain of 300 over the past year mainly because in the summer of 2009 iron mines were undertaking temporary layoffs to reduce inventories of taconite.

Construction

Construction employment fell 2,500 over the month of August as employment peaked in July rather than the usual August peak. Most of the decline came in specialty trade contractors including substantial weakness in building equipment contractors. The supersector continues to show the largest over-the-year decline both numerically and on a percentage basis, down 8,100 jobs equal to -7.8 percent.

Manufacturing

There was little change in manufacturing employment in August as seasonally adjusted estimates showed a loss of 200. Durable goods posted a loss of 500, which was partly offset by an increase of 300 in nondurable-goods manufacturing. The gain in nondurable-goods manufacturing was caused by a spurt of growth in paper manufacturing and in printing and related, which has shown weak results for some time. On an annual basis manufacturing showed a gain of 5,600 jobs, equal to 1.9 percent. Both durable-goods and nondurable-goods manufacturing contributed to the growth, particularly food manufacturing and fabricated metals. Growth in Minnesota was substantially greater than for the U.S. where no change occurred on a percent basis.

Trade, Transportation, and Utilities 

The largest monthly loss took place in trade, transportation, and utilities as all three of its major industry sectors showed monthly losses in August. The primary loss was a drop of 1,900 in transportation, warehousing, and utilities. Although there was no area of strength in this sector the majority of the loss came from larger-than-usual seasonal declines at bus companies along with weakness in truck transportation. Retail trade fell 700 with a general lack of growth in its more detailed industry groupings. Weakness in nondurable wholesaling and wholesale electronic markets led to a drop of 900 in wholesale trade. Compared to last August the supersector showed a loss of 1,800 caused entirely by a decline in transportation, warehousing, and utilities where employment fell 4,900 as all transportation industries showed annual losses. Partly offsetting this decline were gains of 2,500 in retail trade and 600 in wholesale trade.

Information

August saw a large job gain in information industries, up 1,400 for the month. Much of the monthly gain came from an unusual rise in publishing industries, which have been on a downward trend for some time. This gain is among the largest monthly gains on record. In previous cases of gains of this magnitude the increase was quickly followed by subsequent reversals. The monthly gain was sufficient to move the rate of over-the-year change from -0.6 percent in July to 1.6 percent in August. Although providing much of the monthly increase, publishing industries showed an annual loss of nearly 700.

Financial Activities

There was a very slight loss of 100 jobs in financial activities over the month of August. There was a gain of 200 among finance and insurance industries, but this was erased by a loss of 300 in real estate. On an annual basis there was a slight improvement as the over-the-year change went from -0.9 percent in July to -0.7 percent in August. The improvement came in finance and insurance, which increased from -0.7 percent in July to -0.4 percent in August largely from improvement in insurance carriers and related.

Professional and Business Services 

Professional and business services employment experienced a second consecutive large monthly increase, up 4,900 jobs in August after a gain of 4,200 in July. August growth was less evenly distributed in the supersector with 4,100 of the supersector gain coming from administrative and support services. During 2010 the administrative and support services sector has added jobs five of eight months for a net 7,900 additional jobs. Compared to last year the supersector increased 13,400. All of the annual gain came in administrative and support, which was up by 15,200 jobs. Professional, scientific, and technical services employment growth has been inconsistent resulting in a loss of 1,800 over the year. Management of companies showed no change from last year.

Educational and Health Services

The second largest increase for the month of August occurred in educational and health services with a gain of 1,900. All of the gain was in health care and social assistance, which increased 2,100. Most of the gains for the month came in nursing and residential care facilities and hospitals. Over the past year the supersector was up 12,200, equal to a 2.7 percent increase. After weakening last winter, supersector growth has improved steadily from a rate of 0.8 percent last January. Educational services was up 3,000 since August 2009 with growth coming from every component industry estimated. Health care and social assistance was up 9,100 with most of the growth coming from nursing and residential care, up 3,900, and social assistance, up 3,500.

Leisure and Hospitality

After five consecutive months of growth, leisure and hospitality employment fell 1,800 for the month in August. Losses occurred in accommodation and food services as well as arts, entertainment, and recreation, down 1,300 and 500 respectively. Accommodation and food services has been the main source of growth adding 10,400 jobs so far in 2010, but arts, entertainment, and recreation added a substantial 3,400 jobs as well. Helped by this period of strong growth, the rate of annual change moved from -2.5 percent in January to growth of 5.8 percent in August. Food services and drinking places had annual growth of 7.2 percent and arts, entertainment and recreation was up 6.9 percent. The only weakness in terms of annual growth was in accommodation where employment was off by 1,300 jobs.

Other Services

Other services employment was down 500 over the month of August, mainly from weaker results in personal services. Over the past year the supersector was down 5,100 with losses spread across the three sectors making up the supersector.

Government

Government employment increased 900 in August from a substantial increase in local government. Local government added 3,700 jobs for the month as public schools saw reduced seasonal decline after summer layoffs were stronger than normal in June and July. This growth erased losses in state government, where education was off, and federal government, where the layoff of temporary Census workers caused a loss of 1,900. Over the past year, government employment increased 1,800 with gains of a few hundred in federal, state, and local government. Local government education has been much weaker, but non-education local government has added enough employment to erase that loss.

* 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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