The state’s employers eliminated an estimated 2,000 jobs in August and the unemployment rate inched up 0.1 percent to a seasonally adjusted 5.9 percent, according to data released Thursday by the Minnesota Department Employment and Economic Development (DEED).
 
The job losses last month follow two straight months of job gains. However, state economists revised July’s job gain, reducing the number of jobs added that month to 4,800—2,000 fewer than previously reported.
 
“Despite solid job gains in the previous two months, the labor market is still struggling to find its footing,” DEED Commissioner Mark Phillips said in a prepared statement. “The long-term trend remains positive, however, with the majority of business sectors reporting job growth over the past year.”
 
The state has added 24,500 jobs in the past year, representing a growth rate of 0.9 percent. More good news: Minnesota’s unemployment rate remains well below the national rate, which was 8.1 percent in August.
 
Although last month’s job loss and unemployment rate figures reflect the same overall job market trend for August, the numbers come from different sources. The job loss data is based on a monthly survey of roughly 3,000 Minnesota employers, while the unemployment rate is calculated based on a sample of about 1,700 households.
 
In August, the state experienced a slight decline in its labor force participation rate—which dropped 0.1 percent to 70.8 percent. Labor force participation refers to the portion of working-age people who are either employed or actively seeking work. Steve Hine, DEED’s Labor Market Information Office research director, told Twin Cities Business that the decline is being driven much more by the retirement of Baby Boomers than by job seekers growing discouraged and giving up in their quest to find work.
 
He also pointed out that the decline in labor force participation has had a positive impact on the unemployment rate. “Our labor force is over 13,000 smaller than it was a year ago,” Hine said. “So in a sense, any job growth is enough to lower the unemployment rate when our labor force has been diminishing the way it has.”
 
Hine is, however, concerned about the so-called “fiscal cliff,” a group of automatic spending cuts and tax-break expirations at the federal level that will come together around January 1. Economists—who are reportedly backed by the White House budget office, the Congressional Budget Office, and Federal Reserve Chairman Ben Bernanke—have warned that the nation could fall into a deep recession if a fiscal cliff isn’t averted. (Read more about the fiscal cliff and possible scenarios surrounding it in a Thursday report by National Public Radio.)
 
“I think that our underlying numbers here, despite the weakness in August, are cause for some optimism, but the whole fiscal cliff issue raises a great deal of uncertainty as to whether that optimism will come to fruition,” Hine said, adding that a decrease in consumer spending is almost guaranteed to occur if the spending cuts and tax-break expirations aren’t addressed by Congress.
 
In August, Minnesota added 5,400 government jobs, representing the most of any sector. Hine said that the majority of that growth came through local government positions. Other jobs were added in education and health services (up 1,900), information (up 900), and leisure and hospitality (up 300).

The sectors that shed jobs during August were trade, transportation, and utilities (down 3,400), manufacturing (down 2,700), construction (down 1,300), financial activities (down 1,100), other services (down 1,100), professional and business services (down 600), and logging and mining (down 300).

Over the past year, job gains have occurred in professional and business services (up 11,700), education and health services (up 11,400), government (up 10,000), manufacturing (up 2,100), information (up 1,700), financial activities (up 1,600), construction (up 1,600), and logging and mining (up 100).

Year-over-year job losses, meanwhile, have occurred in leisure and hospitality (down 8,300), trade, transportation, and utilities (down 6,700), and other services (down 500).