October2017 Employment Analysis

(Embargoed until 10 am Thursday, November 16, 2017)

Overview

  • Payroll jobs on a seasonally adjusted basis were off by 4,500 in October, with the private sector shedding 5,000 during the month. While annual growth remains relatively healthy, job gains have clearly slowed over the past six months, with total non-farm employment increasing by a mere 5,300 since April.
  • As mentioned above, annual job growth held fairly steady at 41,372 or 1.4%, a rate that once again just matches the current national rate of annual growth after having exceeded it for the previous five months. Likewise, annual gains in the private sector, 39,487 jobs for a 1.6% rate of growth, were up slightly over the previous month and also matched the corresponding US growth rate.
  • Minnesota’s seasonally adjusted unemployment rate fell four-tenths of a point to 3.3% in October. The last time we had a 3.3% unemployment rate was in October 2000, exactly 17 years ago. To put this change in some context, we saw our rate fall to 4.0% for the first time after the great recession in July 2014, and fall further to 3.7% by March 2015. Since then, our unemployment rate has been stuck in this 3.7-to-4.0 range for over three years despite persistent gains in employment. The surprising aspect of this decline in our unemployment rate is not so much the large drop in October but rather that the decline didn’t occur earlier and more gradually over the three prior years. Making the October drop even more impressive is the continued upward trend in our labor force participation rate, which reached 70.5% in October, up a tenth point over September and 1.1 percentage points over a year ago,despite the well-known population shift towards older, and hence lower participation rate, cohorts.
  • Seven of the 11 major industry sectors shed jobs during October, with education & health care and construction losing the largest number with declines of 2,400 and 2,300 respectively. Trade, transportation & utilities was off 1,600, followed by financial activities (down 500), other services (off 400), and professional & business services and logging & mining each off 100. Leisure & hospitality led the gainers with a 1,400 job increase, followed by manufacturing (up 600), government (+500), and information (+400).
  • In terms of annual job growth, Minnesota currently outpaces the nation in nine of the eleven major sectors, the two in which we lag being financial activities and professional & business services. Manufacturing is now growing at its strongest clip since July 2015 while financial activities is losing jobs faster than at any time since March 2014.

Minnesota OTY Job Change / Minnesota OTY Change (%) / US OTY Change (%)
Total nonfarm / 41,372 / 1.4% / 1.4%
Total Private / 39,487 / 1.6% / 1.6%
Logging & Mining / 615 / 9.2% / 8.2%
Construction / 4,893 / 3.9% / 2.6%
Manufacturing / 3,974 / 1.2% / 1.2%
Trade, Transport. & Utilities / 4,881 / 0.9% / 0.4%
Information / -904 / -1.8% / -2.1%
Financial Activities / -1,215 / -0.7% / 1.8%
Prof. & Business Services / 2,670 / 0.7% / 2.6%
Ed. & Health Services / 13,380 / 2.5% / 2.0%
Leisure & Hospitality / 6,776 / 2.6% / 1.8%
Other Services / 4,417 / 3.8% / 1.4%
Government / 1,885 / 0.4% / 0.3%
  • The private sector average work weekincreasedfrom 34.1 in September to 34.5 hours in October, while the private sector average wage rate increased by 16 cents to $28.72 per hour. This resulted in OTY wage growth of $1.09 or 3.9% in October,theslowest in over a year, but still better than the OTY national average wage growth rate of 2.4%.

Details

  • Leisure and Hospitality: After a slowdown in September when this sector lost 1,500 jobs, Leisure and Hospitality had an impressive rebound in October, gaining 1,400 jobs over the month, and 6,776 job gains over the year (unadjusted). All of the monthly job gains came from Arts, Entertainment, and Recreation (+3,100) while Accommodation and Food Services lost 1,700 jobs. This was the reverse of September numbers, when Accommodation and Food Services gained 900 jobs while Arts, Entertainment, and Recreation had lost 2,400. Last month we predicted that the September slowdown was a temporary pause after strength in Leisure & Hospitality earlier in the year. October’s strong showing corroborated that prediction. Additionally, the continued strong showing of this sector over the year provides further reassurance that this sector is on an upward trajectory overall.
  • Manufacturing: Both Durable and Non-Durable Goods Manufacturing gained jobs over the month, continuing a positive job growth trend. October’s adjusted employment number of 322,400 was the highest for this sector since January 2009. Over the year growth rate for this sector was 1.2%, the highest since July 2015.
  • Education & Health Care: Both Educational Services (-900) and Health Care and Social Assistance (-1,500) lost jobs over the month. The October loss was on top of a downward revision of 1,400 to September’s gain. And while unadjusted numbers show that this sector has added more than 13,000 jobs over the year, this is less than half the annual gain reported as recently as June. All of the over the year growth came from Health Care and Social Assistance (+17,936 or 3.9%), while Educational Services has witnessed a decline of 4,556 jobs or -6.3% change over the year.
  • Construction: Construction extended its string of consecutive monthly job losses to four with October’s 2,300 decline, a clear disappointment after such a strong start to the season between February and April. Despite these recent losses, this sector continues to grow over the year, adding 4,893 jobs over the year for a 3.9% growth rate. This remains higher than the national average over the year growth rate of 2.6%. All of this growth has been concentrated in Specialty Trade Contractors (+6.2% OTY), and Heavy and Civil Engineering Construction (+2.4 OTY). Construction of Buildings (-2.1%), including the Residential Building Construction (-1.2%) component, posted OTY losses. Given that this heavily seasonal sector saw an early start to the construction season this year, these over the month job losses are likely seasonal corrections to compensate for the strong start.
  • Trade, Transportation, and Utilities:The overall over the month job loss of 1,600 came from Whole Sale Trade (-800) and Transportation, Warehousing, and Utilities (-1,400), while Retail trade registered a growth of 600 jobs. The sectoral loss comes after healthy over the month gains in August (2,600+), and September (+2,400). Both August and September had over the month job growths not seen in this sector since January 2013. The October job loss is likely a small correction after the impressive growth of the previous two months. In contrast, the over the year job growth in this sector has been positive with the growth rate for October at +0.9%, thus providing reassuring evidence of a more positive long term trend. Annual gains in Retail have been even stronger, at 1.8% growth, as we get closer to the all-important holiday season.
  • MSAs: Annual job growth across the state’s metropolitan areas show sizeable gains in all MSAs, including an unadjusted over the year growth rate of 2.4% in Minneapolis-St. Paul, +1.6% in Duluth-Superior, +0.5% in Rochester, +1.6% in St. Cloud, and +1.6% in Mankato (See Table 2).

Table 2. Employment Change by MSAs

Metropolitan Statistical Area / OTY Employment Change (#, NSA) / OTY Employment Change (%, NSA)
Minneapolis-St. Paul MN-WI MSA / 47,627 / 2.4%
Duluth-Superior MN-WI MSA / 2,217 / 1.6%
Rochester MSA / 641 / 0.5%
St. Cloud MSA / 1,768 / 1.6%
Mankato MSA / 960 / 1.6%
  • Unemployment rates by demographics: Based on unofficial estimates of the Current Population Survey, the 12-month moving average (November 2016 – October 2017) employment status of the civilian non-institutional population shows an unemployment rate of2.9% for Minnesotan females and 4.3% for Minnesotan males. When examined by race, the unemployment rate was 3.0% for White Minnesotans, 8.0% for Blacks (down from 8.5% in September), and 5.1% for Hispanics (down from 5.3% in September).

Outlook

With the release of October 2017 employment numbers, there is much to be optimistic about the Minnesota economy. For one, Minnesota now has experienced 87 months or more than seven years of over the year (unadjusted) employment expansion, and October is the start of the ninth year of recovery from the recessionary low point in September 2009.Since turning positive, annual job gains have averaged 42,278, so job growth remains very near our post-recessionary norm with no sign yet of losing steam. And then there’s the October unemployment rate of 3.3%, the lowest we have seen in the state since October 2000, while the labor force participation rate and employment to population ratios continue their upward trend as we head into the final two months of the year.

Labor Market Information Office

MN Department of Employment and Economic Development

November 16, 2017