Minnesota Economic Indicators

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

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

The Minnesota Index, after climbing for 12 consecutive months, stalled in August as small upticks in unemployment and initial claims for unemployment combined with slow job growth to keep the index unchanged from July. The U.S. index stalled in June and has been flat for the last three months. Minnesota’s index reached an all-time high in September 2008 but plunged for 12 straight months as the recession intensified during the first half of 2009. The index began to rebound last September, two months after the official end of the recession. The state’s index is up 3 percent from a year ago, which is double the 1.5 percent increase recorded by the national index.

Minnesota’s seasonally adjusted Wage and Salary Employment barely changed in August increasing by only 600 jobs. The 3,200 service-providing positions added in August were offset by the loss of 2,600 goods-producing jobs. Service-providing employment advanced in six of the last eight months. Most of the goods-producing job loss was in construction. The 81,900 seasonally adjusted construction jobs reported in August was the lowest total since April 1995 and 38 percent below the 132,300 peak reached in February 2006. Private-sector employment, after climbing for four straight months, inched down in August slipping by 300 jobs. Hiring was strongest in professional and business services and in educational and health services. Layoffs continued in trade, transportation, and utilities while job growth cooled at leisure and hospitality establishments.

Adjusted Business Incorporations were virtually flat again in August continuing a yearlong trend. Limited liability registrations on an unadjusted basis were down 4.9 percent from last August.

The Minnesota’s Purchasing Managers’ Index (PMI) dipped for the second straight month but remained firmly in healthy territory, pointing toward continued economic expansion for Minnesota during the rest of the year. Minnesota’s PMI continues to run well ahead of the national index, 63.7 versus 56.3 in August. Minnesota’s economy has slowed over the last few months just as the national economy has, but Minnesota’s economy remains in better shape than the national economy and should expand faster than the nation's over the second half of 2010.

Seasonally adjusted Residential Building Permits, after plunging in June to a near record low, recovered a bit in July climbing 30.1 percent. But July’s hike from such a low level just kept permit volume bouncing along the bottom. The deep home-building slump lingers on with few signs of better times on the horizon. Without sustained job growth the housing market will continue to be very weak.

Adjusted weekly Manufacturing Hours slipped for the second time in the last three months declining to 40.5 from last month’s 40.7. The factory workweek had been on a year-long climb before the recent leveling off. The flattening of manufacturing hours is consistent with Minnesota’s economy downshifting during the summer.

Adjusted weekly Manufacturing Earnings suffered the biggest monthly drop since February 2009, dropping 1.2 percent. The inflation-adjusted, but not seasonally adjusted, over-the-year increase in manufacturing paychecks declined to 1 percent after averaging a 4.7 percent increase during the 12 previous months.

Adjusted online Help-Wanted Ads rose for the second month in a row, but August’s increase was just 0.9 percent. Adjusted online help-wanted ads are up 37.9 percent from a year ago. The recently released Job Vacancy Survey result was consistent with the expansion of online help-wanted ads. Job vacancies increased 33 percent between the second quarters of 2009 and 2010. The pace of hiring is gradually accelerating but remains significantly below the pre-recession level. Job vacancies in the second quarter were 34 percent below vacancy levels in 2006 and 2007.

Minnesota added 32,500 jobs over the last year, but the fourth-straight month of increasing adjusted Initial Claims for Unemployment Benefits (UB) may be pointing toward slower job growth over the rest of the year. Initial claims inched up 1 percent in August to the highest level since last November. The national economy has slowed since March, and fears of another recession developing have jumped. Minnesota’s economic indicators were mixed in August reflecting the slowdown in the state’s economy over the last few months.

Top