Several of July’s economic indicators slipped as reported today by the Minnesota Department of Employment and Economic Development (DEED). Some favorable data may indicate this is only a short-term pause. DEED analyst Steve Hine observes we are now in the 73rd month of a dramatic recovery, although troubling areas are yet to fully rebound.
First July on record with construction down
Construction employment in Minnesota has always gained in July since DEED began tracking it in 1990. The sector lost 2,000 jobs compared to the month previous. This is not a huge loss as it is still 724 more jobs than the year previous. Steve Hine believes the rapid rate of job gains in this recovery “seems to be exhausting itself,” and we should be witnessing a “slower but more sustainable level of growth.”
Job loss, unemployment and labor participation worsen
Minnesota employers eliminated a seasonally adjusted 3,900 jobs in July according to DEED reports. Private sector employment was hit hardest eliminating 6,600 jobs as government added 2,700 new jobs in July. Unemployment rate is back to 4 percent as the rate gained 0.1 percent for the month. Labor participation rate dropped 0.3 percent to 73.3 percent. Most Minnesota indicators compare favorably to the U.S. as, for example, its unemployment rate at 5.3 percent.
Average workweek and earnings improve
The agency reported a 0.1 of an hour gain to 34.2 in average workweek compared to June and equals the number for July of last year. Average earnings are up twelve cents for the month. We are experiencing low levels of lay offs as measured by first time unemployment compensation applications.
Long-term steady growth
While the agency reported a July job loss, it revised June’s report upward by 2,700 jobs for a total gain in that month to 5,600 jobs. Furthermore, Minnesota added 43,719 jobs since last year or a 1.5 percent growth rate.
Compares favorable to previous recovery
Hine noted Minnesota’s growth rate more than doubles the previous economic expansion cycle. Minnesota has added an average of 2,825 jobs for the 73 months since the start of the cycle. This compares favorably to the 1,340 jobs added between November 2001 and December 2007. Minnesota reduced its unemployment rate from 8.1 percent to 4.0 percent during the most recent growth cycle. Hine cautioned, “The dramatic recovery this time is a function of the depth and severity of the economic downturn. We fell further and had more room for improvement than the dotcom or Y2K tech recession. Nevertheless, it outperforms the previous recession.”
Troubling areas remain
We have not returned to pre-recession levels for the long-term unemployed and for African-Americans, says Hine. He observes we continue to experience a high rate and number of the long-term unemployed. Currently 26,000 of the 120,000 unemployed have been unemployed longer than six months, he says. African-American unemployment continues to be very high at 15.5 percent.
DEED provides state leadership in economic development through business recruitment, expansion and retention. It also develops the workforce, international trade and community growth.