Minnesota Economic Indicators
by Dave Senf - david.senf@state.mn.us
September 2011
Note: All data except for the Minnesota Index, U.S. Index, Minnesota Leading Index, and PMI have been seasonally adjusted. Minnesota Leading Index data are current through July 2011 while all other indicators are current through August 2011. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.
The Minnesota Index climbed for the 19th straight month in August thanks in part to the return of state government employees to the payroll numbers. While the end of the state government shutdown boosted monthly numbers, the state’s economy has been on an upswing since May. The national economy, on the other hand, has been slowing with the national index increasing only 0.3 percent since May. The Minnesota Index jumped 1.3 percent over the same period, recording the third largest state gain behind only Wyoming and Massachusetts. Minnesota’s index is up 2.9 percent from a year ago, the highest over-the-year gain since March 2006.
Minnesota’s adjusted Wage and Salary Employment rebounded in August with the highest monthly increase on record as 22,700 state government employees returned to work. Job growth wasn’t limited to the state payroll, though, as the private sector added 5,800 jobs. Private employment has increased in seven of the last eight months.
July’s private-sector job growth was concentrated in trade, transportation, and utilities; construction; education and health services; and manufacturing. Job cutbacks were steep in leisure and hospitality. Job growth in the goods-producing sector was positive for the fourth month in a row in August. The last time that happened in Minnesota was mid-2004.
Unadjusted job growth spiked to 1.7 percent in August, the highest percentage increase since March 2006. The 1.7 percent gain translates into 44,000 more wage and salary jobs than a year ago. Minnesota’s job creation was significantly above the 1.0 national over-the-year rate.
After a big jump in June the Minnesota Leading Index reversed directions, declining in July as the state government shutdown drove wage and salary employment down. The leading index should show a spike in August when state workers are added back into employment totals. The positive reading indicates that Minnesota’s economy should continue to expand through the rest of the year.
The Minnesota’s Purchasing Managers’ Index (PMI) zigzagged down in August, sliding to 56.3. Minnesota’s PMI continues to run ahead of both the national and Mid-America indices, suggesting that Minnesota’s manufacturers will expand faster than the rest of the nation for the rest of the year.
Minnesota’s home-building industry prospects continue to look bleak with adjusted Residential Building Permits dropping 30.7 percent in August after having shown some signs of life during the previous two months. The depression in home building didn’t end in 2011 and looks like it will continue on into 2012.
Adjusted weekly Manufacturing Hours rose for the first time since April, climbing to 40.7 hours in August. The increase was consistent with the moderately strong PMI reading and the 5,700 manufacturing jobs added in the state over the last three months. More manufacturing hiring is likely if the factory workweek continues to increase.
Manufacturing Earnings surprisingly lost ground in August, dropping to $775.20, the slimmest factory paycheck since last August. Unadjusted earnings were 0.6 percent higher than a year ago, however, the first over-the-year gain in six months.
Adjusted online Help-Wanted Ads, as reported by the Conference Board, slipped for the second straight month in August, decreasing 3.0 percent from the previous month. This was the first two-month slide since April and May in 2009, suggesting that the pace of hiring may slow over the next few months. Nationwide online help-wanted ads have dipped for three consecutive months.
Recently released Job Vacancy Survey (JVS) numbers report that job vacancies in Minnesota jumped 30 percent between the second quarter of 2010 and 2011. The 54,700 job vacancies estimated in the JVS were 12 percent below the second quarter average for 2005 through 2007, indicating that hiring in Minnesota has improved significantly over the last two years but remains below pre-recession levels.
The most encouraging development in August was the drop in adjusted Initial Claims for Unemployment Benefits (UB) to 24,994, the lowest monthly number since December 2010. Initial claims spiked in July, caused by state employees filing for unemployment, so the level was expected to decline significantly in August. But the drop to below 25,000 signals that layoff rates have retreated.
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