MN Cuts Jobs for 2nd Straight Mo., But Jobless Rate Dips

MN Cuts Jobs for 2nd Straight Mo., But Jobless Rate Dips

A state official called April a “pretty bad month” but said that the slight decline in the unemployment rate signals a longer-term, more positive trend.

In April, Minnesota employers cut thousands of jobs for the second month in a row, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED).

Meanwhile, the state’s unemployment rate ticked down 0.1 percent to a seasonally adjusted 5.3 percent—the lowest level seen since May 2008.

Steve Hine, research director for DEED’s Labor Market Information Office, said in a Thursday conference call that the two indicators aren’t necessarily contradictory; rather, the job loss data indicates that April was “a pretty bad month,” while the jobless rate signals a longer-term, more positive trend.

Employers Cut Jobs

Minnesota employers cut 11,400 jobs in April, and only two of the state's 11 employment sectors added jobs during the month. The information and education and health care sectors each added 600 jobs, which Hine called “small gains.”

The trade, transportation, and utilities sector lost 5,700 jobs, the most of any industry. The losses were most prominent in the trucking and wholesale trade components, according to Hine. Unlike losses in other sectors that can be more easily attributed to weather conditions, those job losses seem to reflect weakness in the manufacturing sector, which lost 1,000 jobs in April. (Amid a manufacturing slowdown, truckers have fewer goods to transport, and wholesale trade businesses have fewer products to sell.)

That trend also seems consistent with recently released state data, which found that Minnesota manufacturers exported $20.6 billion worth of goods in 2012, enough to set a new record, but representing an annual growth rate of just 1.2 percent.

Some other job losses appear to be more directly tied to recent weather trends. The government sector shed 2,000 jobs in April, and much of the weakness was in the non-educational, local government component, which includes municipal parks, golf courses, and other weather-dependent operations, according to Hine.

Leisure and hospitality lost 1,900 jobs; other services, 900; professional and business services, 500; financial activities, 400; and construction, 100. Hine anticipates near-term growth in construction, however, as the weather improves and residential, highway, and stadium projects ramp up.

The logging and mining industries, meanwhile, held steady in April.

April marked the second consecutive month that Minnesota has cut jobs. DEED revised March’s job losses from 5,200 to 3,300 jobs lost. March’s job losses came on the heels of seven consecutive months of consistent employment growth.

While weather has played a key role in the recent slowdown, April’s numbers “suggest that there might be broader forces at work here,” such as the impact of sequestration, the $85 billion in across-the-board federal budget cuts that took effect March 1, according to Hine.

Positive Indicators

April’s employment data included some positive signs: The state’s unemployment rate, for example, dipped 0.1 percent to a seasonally adjusted 5.3 percent. Minnesota’s jobless rate also remains well below the national rate of 7.5 percent.

Part of the reason for the seemingly disparate signals—the jobless rate declining while employers shed jobs—is that the data is derived from different sources. (Job loss and gain figures come from a survey of employers; the unemployment rate is based on data collected from Minnesota households.)

Hine said he doesn’t perceive April’s data as containing “conflicting signals.” The job numbers are based solely on the month’s data, while the calculation of the unemployment rate is weighted, taking into account recent months’ information.

Therefore, the jobless rate implies that “generally we’re trending in right direction,” while the job loss figure indicates that “this last month was a poor one,” Hine said.

Meanwhile, there were positive indicators in April that suggest improvement in May (in addition to the turnaround in weather). For example, online job postings increased during the month, and the labor force participation rate rose 0.1 percent to 70.9 percent—marking its first uptick this year.

“While we’ve seen mixed results in the labor market in recent months, the overall outlook for jobs in Minnesota remains positive,” DEED Commissioner Katie Clark Sieben said in a statement. “Eight of the state’s 11 major industrial sectors have gained jobs in the past year, and the unemployment rate is at a five-year low.”