Minnesota employers cut 1,900 jobs in May

Minnesota’s payrolls thinned out in May, as nine of 12 employment sectors reported job declines during the month.

After a strong month of hiring in April, Minnesota’s employers cut 1,900 jobs in May with especially big losses in construction and manufacturing, the Minnesota Department of Employment and Economic Development said Thursday.

Minnesota’s unemployment rate was steady at a seasonally adjusted 3.8 percent, still below the national rate of 4.7 percent in May. During the past year, the state has added 27,987 jobs for a tepid 1 percent growth rate; the national growth rate is 1.7 percent.

Coming on the heels of a revised 14,300 jobs gained in the previous month, the May numbers were lackluster in the state.

“During the month, our labor markets continued a recent zig-zag pattern of a strong month followed by a small decline,” said Steve Hine, director of DEED’s Labor Market Information Office.

Hine said he’s a bit puzzled by the loss of 1,900 jobs in construction, given the strong fundamentals of the housing market and “all the orange cones that are out there” as a result of previous public transportation funding.

“We would expect to see better numbers here in construction,” Hine said.

Even so, the year-over-year growth in the construction sector is still in positive territory with a gain of 4,295 jobs. And the monthly figures tend to fluctuate and are often revised, as was the case in April.

Digging deeper into the May numbers, Hine identified residential building as a weak spot within the larger construction sector. Employment in residential building is down 3.6 percent from a year ago.

The employment decline comes as residential construction permits are on the rise. Through the first five months of 2016, permits for single-family houses (1,875) are up 16.7 percent and planned multifamily units (1,386) are 30 percent ahead of last year’s pace.

Hine also called attention to the declining rate of growth in specialty trades employment. The current year-over-year growth rate is 3.1 percent, down from 10.1 percent in May 2015, according to DEED.

Meanwhile, the average workweek in construction is shrinking slightly. In Minnesota, it now stands at 38.9 hours, compared with 40.2 hours in May 2015. That strikes Hine as odd, considering the tight labor market in construction.

“If it were the case that construction companies were struggling to find people to fill positions, I would expect to see the average workweek of those employees that are on construction company payrolls to be increasing — and yet they are not,” Hine said.

In recent years, contractors said it has been difficult to hire as many qualified workers as they need. They’ve also worried about recruiting the next generation of workers to replace retiring baby boomers and those who left the industry during the recession.

Dave Semerad, CEO of the Associated General Contractors of Minnesota, said employers are “watching their expenses,” so it’s not particularly surprising to him the workweek has contracted slightly.

As for the monthly decline in construction jobs, he said the market “seems to be cooling off just a little bit.” But he’s not overly concerned.

“If we see this for a couple of months in a row then you might have to look a little further into it. I would say it’s temporary,” Semerad said.

Education and health services led all sectors in May with the addition of 3,900 jobs, but government (up 2,700) and information (up 200) were the only other sectors with gains.

Besides construction, DEED reported monthly losses in manufacturing (down 2,300), financial activities (down 1,300), leisure and hospitality (down 1,000), trade, transportation and utilities (down 800), other services (down 600), professional and business services (down 500), and logging and mining (down 300).

Hine said the monthly sector performance is “almost a mirror image of the previous month,” when all but two sector added jobs.

Year-over-year, education and health services set the pace with 18,533 new jobs. Other sectors in positive territoryareprofessional and business services (up 2,906), government (up 1,811), trade, transportation and utilities (up 1,558), financial activities (up 1,510), and leisure and hospitality (up 986), DEED said.
Logging and mining has lost 1,585 jobs in the past year. Other sectors with year-over-year losses are information (down 1,303), other services (down 506) and manufacturing (down 218).