MN Jobless Rate Dips to 5.6%, But 3,100 Jobs Were Lost

The state's monthly job estimate, which is based on a survey of roughly 3,000 employers, found that Minnesota lost 3,100 jobs in April. But a state official said that the estimate likely misrepresents the state's employment picture, and he expects the job figure to be revised upward.

Minnesota's unemployment rate fell 0.2 percent in April to a seasonally adjusted 5.6 percent, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED).

But the decline in the jobless rate occurred as Minnesota employers eliminated 3,100 jobs, DEED said.

It's not unprecedented for DEED to report a drop in the unemployment rate in conjunction with a decline in jobs; for one thing, the state's monthly job loss data is derived from a survey of roughly 3,000 employers, while the unemployment rate comes from a sample of about 1,700 households.

But during a Thursday morning conference call, Labor Market Information Office Director Steve Hine said he believes that “our job situation is better than these monthly survey-based estimates are suggesting”-significantly better.

Based on the monthly estimate, which is produced by the U.S. Bureau of Labor Statistics, Minnesota is up only 14,700 jobs year-over-year, representing a growth rate of 0.6 percent. (For context, the national growth rate is 1.3 percent.)

But Hine said that all of Minnesota's employers-rather than the relatively small sample used in the monthly survey-submit quarterly reports to the state, and a “very cursory look” at those records shows a significant discrepancy between the two sets of data. The quarterly reports are used to make annual revisions to the state's job data, and Hine expects that the job loss and job growth figures will be revised upward.

“With sample-based estimates, there are always sampling errors one can expect, but there may also be misrepresentations of what is being experienced economy-wide,” Hine said.

Based on the quarterly reports, Hine estimates that the state has actually added 55,000 jobs year-over-year-which, if true, would boost the growth rate to 2.2 percent.

The slight dip in the state's unemployment rate can be attributed in part to declining work-force participation. Minnesota's labor-force participation rate dropped 0.2 percent in April to 71.1 percent-the lowest rate seen since the early 1980s. Hine chalked up that decline in part to a demographic shift, as Baby Boomers are hitting retirement age. But it also reflects discouraged workers who have quit searching for employment.

Some people are seeing “a lack of opportunities,” and it remains “a buyer's market out there” for employers, Hine said.

Positive indicators during April included a decline in the ratio of unemployed to online job postings and an uptick in the average number of hours worked per week.

The slight drop in the unemployment rate effectively eliminates the increases from the last two months; the rate inched up 0.1 percent in both February and March. Those slight increases followed many months of the unemployment rate either dropping or holding steady.

Minnesota's jobless rate remains significantly lower than the national average, which was 8.1 percent in April.

According to the official numbers released Thursday, Minnesota's manufacturing sector added 2,200 jobs in April, the most of any sector. Financial activities, along with education and health services, also added jobs, up 2,000 and 1,600, respectively. The logging and mining sector remained unchanged.

Job losses occurred in trade, transportation, and utilities (down 3,400); construction (down 1,600); leisure and hospitality (down 1,400); government (down 1,000); professional and business services (down 1,000); other services (down 300); and information (down 200).