Unemployment Steady; MN Adds 5.8K Private-Sector Jobs

Minnesota's official unemployment rate remained unchanged at 7.2 percent in August-in part because a "smoothing out" of data understated the effect of 22,000 laid-off state workers who returned to the job following the state government shutdown. A state official told Twin Cities Business that the "unsmoothed" rate is 7 percent.

Minnesota's official jobless rate remained unchanged at a seasonally adjusted 7.2 percent in August-and that's after adding 28,400 jobs, including 22,000 state employees who returned to work after the government shutdown, according to data released Thursday by the Minnesota Department of Employment and Development (DEED).

But the unemployment figures were “skewed by the smoothing of data that understated the impact of thousands of state employees returning to work en masse,” DEED said.

The federal government last year altered its methodology for computing state unemployment rates-and the new method lessens the impact of major employment events, like the temporary loss of 22,000 state workers, according to Labor Market Information Office Director Steve Hine.

Hine told Twin Cities Business on Thursday that the new methodology is problematic in that it doesn't fully account for “real economic events like a shutdown.”

He projected that the state's “unsmoothed rate” for August was actually 7 percent, compared to 7.6 percent in July and 6.9 percent in June. “These are more reliable indicators,” Hine said.

Last month, the official jobless rate rose to 7.2 percent from a revised 6.8 percent in June. Laid-off government workers returned to work on July 21-but employment figures used in official unemployment calculations are taken from earlier in the month.

In addition to the laid-off government workers returning to the job, Minnesota added 5,800 private sector jobs in August-representing “a bright spot of the Minnesota economy,” according to DEED Commissioner Mark Phillips.

“We have seen state manufacturers, construction companies, and other private businesses add more than 42,000 jobs in the past four months,” Phillips said in a statement. Another positive indicator: Minnesota's initial claims for unemployment insurance benefits fell to its lowest number in three years.

In addition to the state government, the following industries added jobs in August: trade, transportation, and utilities (up 4,100); construction (up 2,200); education and health services (up 1,400); manufacturing (up 1,200); and professional and business services (up 700).

The state's construction industry-the hardest hit in recent years amid the economic downturn-added 7,500 jobs in the past four months, marking the first job growth experienced during the summer construction season since before the housing crash in 2006, DEED said.

The state shed jobs in August in the following sectors: leisure and hospitality (down 3,300); financial activities (down 200); other services (down 200); and information (down 100). The mining and logging industries, meanwhile, remained unchanged from the prior month.

“We're seeing over the past four months the kind of changes we'd hope to see in the early stages of recovery,” Hine said, adding that the state's unemployment rate has remained well below the national average. “But the national economy has shown signs of slowing-and that's going to be a drag on our state economy if it continues into the future.”

The national unemployment rate was 9.1 percent in August, unchanged from July.