MN Jobless Rate Holds Steady Despite 8,100 Jobs Lost

The state's unemployment rate remained unchanged at 5.8 percent last month; the professional and business services sector shed the most jobs, while other sectors, like construction, added jobs.
MN Jobless Rate Holds Steady Despite 8,100 Jobs Lost

Minnesota employers cut 8,100 jobs in October following a month of significant employment gains, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED).

Minnesota’s unemployment rate, meanwhile, held steady at 5.8 percent last month and remains well below the national rate of 7.9 percent.

While the state reported net job losses for October, the employment picture for September became a bit rosier: The state previously said that employers added 5,900 jobs in September; that number has since been revised upward to 11,000 jobs gained.

Katie Clark, who replaced Mark Phillips as DEED Commissioner last month, said in a statement that October’s job losses “are a reminder that the economic recovery on a month-to-month basis is at times uneven.”

“We’re encouraged, though, by the steady growth in many sectors, particularly construction, which has increased employment by more than 4 percent in the past year,” Clark said. “Our labor force participation rate held steady and our unemployment rate consistently remains below the national average.”

While Minnesota’s jobless rate remains below the U.S. rate, Steve Hine, research director for DEED’s labor market information office, said during a Thursday conference call that the state’s rate has been “stuck in the upper 5 percent range” while the national rate has fallen a full percentage point over the last year.

Year-over-year, Minnesota has added 34,700 jobs, representing a job-growth rate of 1.3 percent. That puts the state on par with the national average of 1.4 percent.

As in months past, Hine expressed some skepticism about the monthly jobs figures, citing September’s 5,100-job revision as an example of how much the numbers can change.

Among other economic indicators, Hine pointed out that the length of the average work week fell to 33.4 hours in October after increasing to 34.3 hours in September. Online job postings, meanwhile, remained “essentially flat.”

October’s job data “reinforces concerns we’ve expressed that the recovery is a fragile one,” Hine said, adding that employers are also keeping a close eye on Congress as the so-called “fiscal cliff,” a series of laws that, if left unchanged by Congress, would trigger tax increases and spending cuts, approaches.

The professional and business services sector accounted for more job losses than any other sector in October, shedding 5,300 jobs. Hine said that the majority of jobs lost were in the administrative category. The sector remains up 6,500 jobs year-over-year, but Hine said that its flattening out might be cause for concern, as a decrease in demand for business services can reflect larger economic trends.

Other sectors that lost jobs in October include government (2,500), leisure and hospitality (1,100), other services (900), education and health services (600), and manufacturing (300).

Meanwhile, the construction industry added 1,200 jobs last month, the most of any sector. Its growth was driven in large part by the specialty trades component, which includes subcontractors. The heavy and civil component, including road and bridge construction, continues to struggle.

State data sometimes reflects two seemingly disparate trends; for example, October’s jobless rate remained unchanged despite a net loss of 8,100 jobs. One reason is that the job gain 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.