Minnesota Economic Indicators
by Dave Senf
Note: All data except for Minnesota’s PMI have been seasonally adjusted. See the feature article in the Minnesota Employment Review, May 2010, for more information on the Minnesota Index.
The Minnesota Index advanced for the 48th straight month in November, but the pace of growth has slowed during the last few months. November’s 0.1 percent increase was significantly below the 0.3 percent average monthly increase achieved during the first six months of the year. The U.S. index jumped 0.3 percent in November as the national economy picked up speed during the last few months. The U.S. index averaged 0.2 percent during the first half of the year but will average 0.3 percent over the last six months of the year. After outpacing the U.S. Index over the first half of the year, Minnesota’s index has lagged behind the U.S. index’s pace over the last half of the year.
Minnesota’s index in November was 2.7 percent higher than a year ago, while the U.S. index was 3.0 percent higher than 12 months ago. The 2.7 percent increase was the lowest over-the-year increase since last November. The slowdown in the Minnesota index may be revised away when employment data are revised early next year, but for now the index is pointing toward a slight slowdown in Minnesota’s economy as the year ends.
Minnesota’s adjusted Wage and Salary Employment slipped slightly in November with 800 jobs lost. Private sector employment was up 2,400, but Government employment declined 3,200. Minnesota’s Private sector added 22,400 jobs during the first half of 2013 but only 13,400 jobs over the last five months. Information added the most workers last month, hiring 1,300 employees. Employment in Financial Activities and Other Services also added more than 1,000 jobs. The decline in Government jobs was concentrated in Local Government employment. Professional and Business Services employment also declined significantly in November.
Over-the-year job growth in Minnesota using unadjusted employment tailed off to 1.4 percent in November compared to 1.7 percent nationally. Minnesota’s annual average job growth rate is likely to be 1.8 percent for 2013 which translates into 49,000 new jobs, up from 39,000 in 2012 and 47,000 in 2011. The state added an average of 54,000 jobs annually between 1990 and 2000.
The Minnesota Leading Index stumbled for the fourth time in the past five months in November. The index, after averaging 1.6 percent during the first half of the year, has averaged 0.9 percent over the last five months. The drop implies that Minnesota’s economic growth will be slowing significantly over the next six months. This is the only indicator that is flashing red about Minnesota’s economy during the first half of 2014.
Minnesota’s Purchasing Managers’ Index (PMI) rebounded slightly in November inching up to 55.7. A reading above 50 indicates economic growth over the next few months, so November’s reading implies Minnesota’s economy will continue to grow through the first quarter of 2014. The employment component of the PMI was above 50 for the 13th consecutive month suggesting that manufacturers will be adding workers over the near future.
Adjusted Residential Building Permits reversed a two-month skid jumping 13.5 percent. Minnesota’s home-building rebound continues to be uneven, but the overall trend is a gradual upswing.
Adjusted Manufacturing Hours dipped a tad to 41.5 hours in November but remain near historical highs. The average factory workweek has been 41.5 hours or longer only 10 percent of the time since 1970. The relatively long workweek suggests that the recent uptick in manufacturing hiring will spill over into 2014.
Manufacturing Earnings rose sharply for the second month in a row, soaring to $835.58 in November. That is the second highest average weekly paycheck earned over the last 43 years by Minnesota manufacturing workers. The $835.58 weekly paycheck works out to $43,450 per year.
After plunging 6.9 percent in October, Minnesota’s adjusted online Help-Wanted Ads surged 8.4 percent in November. November’s 124,000 ads rank as the fifth highest monthly volume since the Conference Board starting counting online help-wanted ads in 1995. Help-wanted advertising, after running below last year’s level since March, jumped to 1.6 percent higher than a year ago in November. Labor demand as measured by online help-wanted ads remains solid suggesting that job growth is unlikely to slow up during the first half of 2014.
Adjusted Initial Claims for Unemployment Benefits (UB), after inching up over the previous three months, headed in the right direction in November, declining 2.4 percent. The low volume of initial claims is another positive indicator that Minnesota’s job growth will remain solid right through the first half of 2014.