State employment backtracked last month

Published 10:12 am Friday, September 21, 2012

By Adam Belz

Minneapolis Star Tribune

Minneapolis — The Minnesota jobs market lost momentum in August as employers cut 2,000 positions, punctuating the slow and uneven economic recovery in the state and across the country.

Email newsletter signup

Most sectors of the state labor market contracted as the unemployment rate ticked up to 5.9 percent. Meanwhile, the state’s robust estimate for job creation in July was revised downward — from 6,800 to 4,800 net jobs.

“The labor market is still struggling to find its footing,” said Mark Phillips, commissioner of the Minnesota Department of Employment and Economic Development.

Most striking in the August report was the decline in manufacturing and construction jobs, as both sectors were producing a steady stream of new jobs over the past 12 months. But Minnesota manufacturers cut 2,700 jobs last month, erasing more than half the gains over the past year; construction companies dropped 1,300 jobs.

“We’ve been noticing a little softening in the manufacturing sector over the past few months,” said Toby Madden, an economist at the Federal Reserve Bank of Minneapolis.

In a state where 2.7 million people are working, the loss of 2,000 jobs could be little more than a rounding error, economists noted. Overall, Minnesota’s economy has created 24,500 jobs in the past 12 months and regained more than half the jobs lost in the Great Recession.

Some indicators are encouraging. The economy has added 3,800 professional jobs since April, mostly in well-paid computer professions and accounting. New claims for unemployment benefits fell by 1,400 in August to their lowest level since March 2008. Minnesota ranks fourth in the nation for the number of job openings per unemployed person, behind only its neighbors to the west.

“We fall behind the Dakotas and Nebraska, which is perhaps because few people want to live there,” joked Steve Hine, a labor market economist at DEED.

And monthly job surveys are not the final word on the health of the state economy. A more comprehensive quarterly census shows job growth may be stronger than the monthly reports portray.