Industrial Analysis

by Jerry Brown
June 2013

Monthly analysis is based on seasonally adjusted employment data.
Yearly analysis is based on unadjusted employment data. *

Overview

Minnesota employment increased 8,400 in May 2013 to erase a large portion of the losses posted in April. This strong growth was expected as many of the highly seasonal industries affected by the unseasonably cold, snowy April weather showed increased seasonal hiring in May. This was particularly the case in Leisure and Hospitality and in Construction, both of which bounced back from losses to add 2,900 and 1,000 jobs in May, respectively. Government showed a sizeable increase of 2,800 mainly from Local Government hiring. Professional and Business Services, Educational and Health Services, and Other Services also saw substantial increases with respective gains of 2,000, 1,800 and 1,100. The only large loss was in Trade, Transportation, and Utilities. The rate of annual growth was much improved in May, up 0.6 of a percentage point to 1.6 percent, equal to the rate of growth nationally. Leisure and Hospitality showed a gain of 3.8 percent helped by its very strong monthly result. Professional and Business Services grew 3.5 percent and added the most new jobs at 11,600 in the last year. Educational and Health Services was up 2.4 percent. No supersector showed a year-over-year loss.

Mining and Logging

Mining and Logging employment was down 100 in the last month, the first measurable loss since last October. However, this does not mean growth has been robust, as there has been a net increase of only 200 during this time. Annual growth was estimated at 300.

Construction

After experiencing a loss in April, employment in Construction industries bounced back to add 1,000 jobs in May. Undoubtedly, part of this pattern was caused by the cold, snowy weather in April delaying some seasonal hiring. This is brought home by the extremely robust performance in Heavy and Civil Engineering Construction which saw a monthly unadjusted increase of about 55 percent as compared to a usual increase of about 38 percent. Of the construction industries, this is the one most impacted by the type of weather Minnesota has seen the past two months and is the source of the majority of the excess job growth in May. Compared to last year, the supersector showed a gain of 1,300 with job growth split between Specialty Trade Contractors, up 900, and Heavy and Civil Engineering Construction, up 800. Construction of Buildings was down 500 jobs.

Manufacturing

Manufacturing posted a slight gain in May as an increase of 900 in Durable Goods Manufacturing was offset by a loss of 800 in Nondurable Goods Manufacturing. This was the first gain since January for the supersector which has shown losses in seven of the last 12 months. Of the durable goods industries Fabricated Metal and Computer and Electronic Product Manufacturing showed the strongest results, with most of the remaining industries showing negligible gains or losses. The most recent Minnesota Business Conditions Index showed a similar pattern of substantial reported growth in the durable goods industries with less improvement in nondurable goods sectors. Very inconsistent results over the past year have limited annual growth to only 300 jobs, equal to 0.1 percent. All of the annual growth came in Durable Goods Manufacturing and in large part Fabricated Metal Manufacturing. Nondurable Goods Manufacturing was down 400, despite fairly substantial growth in Food Manufacturing.

Trade, Transportation, and Utilities

The Trade, Transportation, and Utilities supersector showed a second consecutive loss with an estimated loss of 2,600 in May following a loss of 5,600 (revised) last month. The poor results of the past two months have erased more than half of the jobs added from August 2012 through March 2013. All three of the major industries groupings in the supersector were down for the month, but retail trade accounted for most of the loss with a decline of 2,000, a third consecutive monthly loss. Outside of Building Material and Garden Equipment and Supply retail trade industries showed no strength, with Department Stores experiencing the worst monthly result. Compared to last May, the supersector showed a gain of 5,200 with gains in all three major components. Despite its recent weakness, Retail Trade showed an annual gain of 2,300 although General Merchandise Stores saw a loss of 800. Most other areas showed modest growth over the past year.

Information

Information employment fell 700 over the past month, with the loss coming from outside of traditional publishing and telecommunications industries. This decline moved over-the-year growth from 3.8 percent last month to 1.5 percent in May, much closer to the 0.6 percent gain nationally.

Financial Activities

Employment increased slightly in Financial Activities. This reflected a gain of 600 in Real Estate and Rental and Leasing, which was nearly negated by a decline of 500 in Finance and Insurance. Most Finance and Insurance industries showed slightly weaker results in May. On an annual basis the supersector showed a gain of 500 with Real Estate and Rental and Leasing providing the growth with an increase of 1,100. Securities and insurance industries were down over the past year.

Professional and Business Services

Professional and Business Services employment showed a monthly gain of 2,000 jobs with the majority of the growth in Management of Companies which added 1,400 jobs. Administrative and Support Activities showed a gain of 800 following losses in the previous two months. Services to Building showed particularly robust growth, likely reflecting expanded seasonal hiring as the weather improved. Over the past year the supersector added the most new jobs, up 11,600, a 3.5 percent gain. All three major component industries showed strong growth in excess of 3 percent. Administrative and Support added 4,900 jobs with strong growth in Employment Services and Services to Buildings.

Educational and Health Services

Educational and Health Services employment was up 1,800 for the month marking the sixth month of growth in the last seven. Private Education and Health Care and Social Assistance each added 900 jobs. With 11,500 jobs added over the past 12 months the supersector was slightly under the number of jobs added in Professional and Business Services. Nearly all of this gain was in Health Care and Social Assistance which saw an estimated increase of 11,400. These gains were distributed broadly among its component industry with Ambulatory Health Care and Nursing and Residential Care Facilities adding 6,400 and 2,500 jobs, respectively.

Leisure and Hospitality

As expected, Leisure and Hospitality employment bounced back from April’s weather-impacted growth to add 2,900 jobs in May. This did not completely offset the losses in the prior two months, but it went a long way to returning employment to its February level. All of the industry groupings showed substantial improvement except for Limited Service Eating Establishments which showed only slight improvement for the month. Accommodation and Full Service Restaurants showed very strong growth to create a monthly gain of 2,400 in Accommodation and Food Services. Arts, Entertainment, and Recreation erased less than a quarter of the jobs lost the previous two months with a gain of 500 for the month. It is possible that we will see expanded seasonal hiring in June. The strong May result helped to improve the year-over-year rate of growth from 0.8 percent in April to 3.8 percent in May. Arts, Entertainment, and Recreation showed estimated annual growth of 6.9 percent, and Food Services and Drinking Places showed a gain of 3.4 with both these figures improving substantially in May.

Other Services

Other Services showed a gain of 1,100 over the month to erase losses of 900 that occurred the previous three months. Over the past 12 months employment has increased six times and decreased six times. However, gaining months have produced enough expansion to post a year-over-year increase of 1,000.

Government

A gain of 3,500 in Local Government outweighed losses in Federal and State Government employment to produce a net gain of 2,800 jobs. Most of the monthly gain in Local Government was centered in non-educational employment where a delay in hiring for outdoor venues and other weather-impacted jobs likely had a major effect on pushing hiring from April to May. Federal Government is now at its lowest level in the seasonally adjusted data which began in 1990. On an annual basis, Government employment increased 1,100 with the increase coming from Local Government.

Minnesota Seasonally Adjusted Nonagricultural Wage and Salary Employment
(In Thousands)

May
2013

April
2013

March
2013

Total Nonfarm

2,770.2

2,761.8

2,772.0

Goods-Producing

411.3

410.3

411.6

Mining and Logging

7.2

7.3

7.3

Construction

98.4

97.4

97.8

Manufacturing

305.7

305.6

306.5

Service-Providing

2,358.9

2,351.5

2,360.4

Trade, Transportation, and Utilities

508.6

511.2

516.8

Information

54.6

55.3

54.9

Financial Activities

178.4

178.3

178.6

Professional and Business Services

348.0

346.0

346.2

Educational and Health Services

488.5

486.7

485.6

Leisure and Hospitality

250.6

247.7

249.7

Other Services

117.1

116.0

116.5

Government

413.1

410.3

412.1

Source: Department of Employment and Economic Development,
Current Employment Statistics, 2013

Chart: Minnesota Employment Growth May 2012 to May 2013

* Over-the-year data are not seasonally adjusted because of small changes in seasonal adjustment factors from year to year. Also, there is no seasonality in over-the-year changes.