More job seekers drive up state unemployment rate

Minnesota’s unemployment rate inched up to 3.8 percent in May, likely driven by an influx of job seekers entering the marketplace.

An unemployment rate increase marked a change from the 3.7 percent rate that held steady over the previous nine months, according to seasonally adjusted data released last Thursday by the Minnesota Department of Employment and Economic Development.

The change came as the labor force participation rate – or the proportion of Minnesotans working or looking for jobs – continued to grow, hitting 70.8 percent in May. That’s the highest mark in more than three years, and the fifth consecutive monthly increase.

About 6,500 people entered the state’s workforce last month, but that included more than 3,000 that hadn’t yet nailed down a job.

“Economic conditions have been strong enough to attract people into the labor force to initiate a job search,” said Steve Hine, research director of DEED’s Labor Market Information Office. “A larger share of new entrants are entering the labor market to look for jobs rather than entering the labor market to take a job they’ve already identified.”

Sunnier prospects for teens looking for summer jobs have lured more 16- to 19-year-olds to the marketplace, Hine said.

Still, general unemployment and workforce-participation data obscures a substantial number of Minnesotans that have part-time jobs but would prefer to be working full time, though that figure slid in May.

The number of workers in that category fell to 97,700, Hine said, the first time it’s sunk below 100,000 since October 2008.

It’s an encouraging sign for the state’s labor landscape, which stayed more or less level last month. Minnesota employers shed 200 jobs, but added 38,383 year-over-year – a 1.4 percent gain in that span, compared to 2.2 percent job growth nationwide.

The trade, transportation and utilities space added 6,600 jobs in May on a seasonally adjusted basis, helping offset losses elsewhere. Other sectors that added jobs last month include financial activities (up 900), government (up 300), construction (up 200) and information (up 200).

Professional and business services outfits lost 4,400 jobs in May, according to the seasonally adjusted numbers, the most of any one sector. Leisure and hospitality shed 1,600, followed by manufacturing, whose workforce slimmed by 1,000 jobs.

Education and health services (down 900), logging and mining (down 300) and other services (down 200) round out the list of job-losers in May.

Meanwhile, the employment picture began to show the effects of a recent spate of corporate layoffs.

Target has cut around 2,400 employees this year, mostly from its Minneapolis headquarters, in one of the nation’s highest-profile corporate slimdowns. Downsizing in northern Minnesota’s mining sector, shaving hundreds of jobs, has also held the spotlight.

“Things could have been quite different had some of those not happened,” Hine said.

The cuts, while substantial, haven’t been enough so far to negate gains made elsewhere. Since May 2014, the only sectors to post net job losses are government (down 2,225 positions) and logging and mining (down 209 jobs).

But just one Minnesota sector –manufacturing – is outpacing the national job growth rate. The state’s manufacturers grew jobs by 1.6 percent year over year, compared with 1.4 percent growth nationwide.

The Jobs Picture

Minnesota year-over-year employment growth by industry sector as of May 2015

Source: Minnesota Department of Employment and Economic Development