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MN government sector loses 5,000 jobs

Minnesota’s overall employment picture brightened a bit in August as the state added 7,300 jobs despite steep losses in the government sector.

The state got a big boost from the professional and business services sector as well as the leisure and hospitality space, which added 4,600 jobs apiece for the month, according to seasonally adjusted data released Thursday by the Minnesota Department of Employment and Economic Development.

Minnesota employers logged growth last month despite a steep 5,000-job loss in the government sector. Job reductions largely trace back to a public school workforce that shrunk faster last month than in any August since 2002, said Steve Hine, research director of DEED’s Labor Market Information Office.

In addition, gains in August cemented year-over-year growth at 1.3 percent, short of the 2.1 percent U.S. average. The state’s unemployment rate outshined national numbers, however, holding steady at 4 percent while the overall rate checked in at 5.1 percent.

But despite relative stability and another month of overall growth for the state, cumulative job totals between August 2014 and last month hint at a more complicated story behind the numbers. For the first time since the post-recession recovery picked up steam in 2010, more sectors lost jobs year-over-year than gained them.

Of the 11 sectors tracked by the state, the job counts for six – logging and mining, construction, manufacturing, information, other services and government – landed in the red.

The losses are mostly small but a continuation of the trend could eventually upset the marketplace, Hine said.

“The fact that we have six sectors now that have lost jobs over the past year, if that is a trend that persists it will certainly be an area of concern,” he said.

Still, Hine noted that leading indicators of a healthy labor market – including a lengthier average work week and increased demand for temp jobs – suggest Minnesota is relatively insulated from substantial losses. Plus, the state’s labor economy is likely returning to normal after a recovery-driven rebound.

That’s a notable factor given that the state’s numbers are seasonally adjusted to weigh each month’s performance against that month’s showing in recent years.

“There’s just not going to be the wherewithal to continue to grow at 40,000, 50,000 or 60,000 jobs per year,” Hine said. “It’s something that will begin to look much more normal in the future.”

A similar trend appears to be playing out in the state’s labor force participation rate. The figure last month fell 0.4 percent to 69.9 percent – the lowest level since January. It tailed off over after peaking at 78.8 percent in May, its high point in a months-long surge that puzzled market watchers.

“We’re seeing a return in that estimation to things that really align more closely with what we suspect is happening in terms of demographics and the aging of our population,” Hine said.

Aside from the biggest growth drivers, other sectors driving job gains in August include education and health care (up 2,900 jobs) and financial activities (up 1,600).

Losses hit the manufacturing space (down 1,000 jobs) and other services (down 400), as well as construction and trade, transportation and utilities (each down 200).

The Jobs Picture

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

Number of Jobs Gained or Lost % Change from 2014
Total Non-Farm Employment 38,037 1.3
Logging and Mining -466 -6.1
Construction -525 -0.4
Manufacturing -583 -0.2
Trade, Trans. and Utilities 5,098 1.0
Information -414 -0.8
Financial Activities 3,590 2.0
Prof. and Bus. Services 10,817 3.0
Ed. and Health Services 15,721 3.2
Leisure and Hospitality 7,871 2.9
Other Services -1,087 -0.9
Government -1,985 -0.5

Source: Minnesota Department of Employment and Economic Development

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