Minnesota’s unemployment rate slipped last month despite employers’ combined loss of 5,700 jobs, signaling a slowing economy that could limit companies’ growth prospects.
A shrinking labor force dragged the unemployment rate to 3.8 percent, down from 4 percent in July and August, according to seasonally adjusted data released Thursday by the Minnesota Department of Employment and Economic Development.
The drop, driven by workers easing into retirement or scrapping their job hunts, pushed the jobless rate near a rate labor market watchers consider “full employment” – the point where it becomes tougher for companies to tack on new jobs to their existing workforces.
“We and the nation are certainly well into that time period where job growth is going to be constrained by the lack of warm bodies available to fill positions,” said Steve Hine, research director of DEED’s Labor Market Information Office.
Minnesota’s unemployment rate is substantially lower than the national rate of 5.1 percent, suggesting the state is heading more quickly toward a period of more sluggish growth prospects after a post-recession economic boom.
“Additional job growth can only occur with additional workers, and we’re going to see that putting a cap on the rate at which we can grow in the years ahead,” Hine said.
The dimmer forecast comes as just two of the 11 sectors tracked by the state — leisure and hospitality, and business services — posted job gains for September. Year-over-year growth across industries hit 1.2 percent, down slightly from the 1.4 percent average since the recession’s low point.
Even without any shocks that send the economy into a tailspin, it could be tough for Minnesota employers across the marketplace to recapture the kind of growth they saw as the economy bounced back over the past half-decade.
“We should expect to see some of our sectors struggle to gain jobs on an ongoing basis,” Hine said, noting that projects for the coming years show the state’s employers adding 4,000 to 5,000 jobs annually. Now, they’re averaging closer to 10,000 positions per year.
An aging workforce is propelling the change, through retirements and shifting job prospects. Sectors like construction that are generally less friendly to older workers will be hit hardest, forcing them to find ways to draw in young people and other under-represented groups.
The “other services” category posted the steepest job losses in September, at 2,500 jobs. Education and health services shed 2,200 and trade transportation and utilities dropped 1,900. Construction, already on a skid, lost another 1,700.
Financial activities shed 600, information was down 500 and government lost 300. Manufacturing matched logging and mining with 100 jobs lost apiece to round out the list.
|Number of Jobs Gained or Lost||% change from 2014|
|Total Non-Farm Employment||35,242||1.2|
|Logging and Mining||-429||-5.8|
|Trade, Trans. and Utilities||5,312||1|
|Prof. and Bus. Services||11,109||3.1|
|Ed. and Health Services||13,497||2.7|
|Leisure and Hospitality||9,714||3.7|
Source: Minnesota Department of Employment and Economic Development