Jobless Rate Dips, But MN Cut 5K Jobs During a Dreary March
After seven consecutive months of consistent employment growth, Minnesota employers cut 5,200 jobs in March—although state officials are calling the setback a likely “pause” in growth, rather than a long-term negative indicator.
On a more positive note, Minnesota’s unemployment rate dipped 0.1 percent in March to a seasonally adjusted 5.4 percent, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED). But that improvement is likely driven by the fact that fewer people are actively looking for work, the agency said.
Steve Hine, research director for DEED’s Labor Market Information Office, said in a Thursday conference call that March’s slowdown is likely a symptom of “unseasonably miserable weather.”
Many industries whose businesses rely on warmer weather—such as restaurants offering outdoor seating or retailers selling building materials or gardening supplies—saw weaker-than-usual hiring in March, Hine said. In fact, the leisure and hospitality sector lost a total of 2,100 jobs during the month.
“I’ve got to say, looking out the window, that we may see an extension of this weakness into April’s numbers,” Hine said.
The education and health services sector lost 2,900 jobs in March, the most of any industry. However, there was “no glaring weak spot” within the sector, which has added jobs in all but two of the past 24 months, Hine said.
The other sectors that lost jobs in March are government (down 1,500), financial activities (800), manufacturing (400), and other services (100).
The trade, transportation, and utilities sector added 1,400 jobs in March, the most of any sector. While the construction industry also added jobs during the month—800—Hine said that the sector might have seen larger gains if it weren’t for the inclement weather.
The professional and business services sector added 400 jobs in March, while information and logging and mining held steady.
While weather likely played a key role in March’s job losses, the cuts might also be related to sequestration, the $85 billion in across-the-board federal budget cuts that took effect March 1, Hine said. The cuts could have a direct impact on some Minnesota businesses, while creating economic uncertainty among others.
Meanwhile, Twin Cities Business' latest quarterly economic indicator survey found that, while overall business optimism is increasing in the state, employers are concerned about finding the talent they need.
March’s job losses come after a long string of employment gains, although DEED said Thursday that February’s growth was less pronounced than first reported. The agency previously said that Minnesota employers added 14,500 jobs in February; that number has since been revised down to 9,900.
Regarding the state’s unemployment rate, DEED said that the 0.1 percent decline in March was likely fueled by a drop in the labor force participation rate, which dipped 0.1 percent to 70.8 percent. Hine said that he is unable to surmise from DEED’s data, however, what portion of the participation rate reduction is due to disgruntled workers giving up their searches and what portion reflects the retirement of aging workers.
Minnesota’s unemployment rate remains well below the national rate of 7.6 percent. And the state continues to outpace the nation with respect to job growth: Minnesota has gained 46,400 jobs over the past year, a growth rate of 1.7 percent, compared with the U.S. rate of 1.5 percent.
“Despite this pause in growth, Minnesota remains near its pre-recessionary peak job numbers and continues to outpace the rest of the country in job growth,” DEED Commissioner Katie Clark Sieben said in a statement.