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 Philadelphia Federal Reserve Bank, which produces the Minnesota Leading Index, has temporarily suspended generation of state leading indices. For more information see https://www.philadelphiafed.org/research-and-data/regional-economy/indexes/leading.
After bottoming out in May the Minnesota Index advanced for the second straight month in July, climbing to 122.4. Minnesota’s index increased by 2.8% over the month while the U.S. index rose 0.8%. All four components of Minnesota’s index improved in July as wage and salary employment continued to increase, unemployment ticked down to 7.7%, wage and salary disbursements rose, and average weekly manufacturing hours jumped to its highest level since February.
Minnesota’s index is down 12.5% from a year ago while the U.S. index is down 4.5% over the year. Minnesota's index is still 13.5% lower than its peak in March. The U.S. index is 5.9% below its peak reached in February.
Adjusted Wage and Salary Employment continued to rebound in July, but the pace slowed from June. Minnesota employers added 32,500 jobs in July which was roughly half the 74,700 added in June. In percentage terms, jobs in Minnesota increased 1.2%, while nationally jobs climbed 1.3% in July. Over the last three months the state has recovered 35% of the 387,800 jobs lost in March and April. Minnesota lost 13.0% of its wage and salary employment during March and April compared to 14.5% for the U.S. The U.S. has recovered 42% of the jobs lost through July.
Most of the July job gain was in the private sector with private employment climbing 26,300 while public sector employment increased 4,000. Payrolls continued to expand the most in sectors that were most affected by the coronavirus shutdown. Leisure and Hospitality, Educational and Health Service, Other Services, and Trade, Transportation, and Utilities added a combined 32,900 workers. Four sectors reduced payroll numbers with Information and Professional and Business Services each cutting their workforces by 900.
Minnesota’s unadjusted over-the-year employment was negative 8.5%, meaning there were 8.5% fewer wage and salary jobs in July compared to a year ago. The U.S. drop was 7.7%. Idaho had the lowest over-the-year decline of 0.7% while Hawaii had the largest with 16.2% fewer jobs than 12 months ago. Minnesota’s 8.5% decline ranks as the 16th largest drop. July’s over-the-year % changes in surrounding states were South Dakota (-4.4), Iowa (-6.0), North Dakota (-7.9), and Wisconsin (-8.7).
After plunging for three straight months, Online Help-Wanted Ads jumped 6.9% to 97,700 postings. U.S. online job postings climbed 12.5% in July. Minnesota’s share of nationwide online job postings dropped to 2.2% which is slightly higher than the state’s 2.0% share of U.S. wage employment.
Minnesota’s Purchasing Managers’ Index (PMI) rose for the third consecutive month, advancing to 54.7, its highest reading since January. July’s reading indicates that Minnesota manufacturing activity has started to expand after four months of contraction. Minnesota’s PMI still lags behind the Mid-America Business Index (57.4) but topped the national PMI (54.2) for the first time since February. Minnesota’s factory rebound has apparently caught up with the national factory rebound.
Average weekly Manufacturing Hours rose for the third month in a row, after crashing in April, to 39.7 hours in July. July’s factory workweek is still slightly below February’s level and significantly below the 41.0 hours annual average recorded in 2019.
Average weekly Manufacturing Earnings skyrocketed to $950.89 in July. July’s factory paycheck was the highest since October 2019 and is another positive indicator that Minnesota’s manufacturing sector has regained some momentum after four months of contraction. July’s inflation-adjusted manufacturing earnings for production workers were up 0.5% from a year ago.
Adjusted Residential Building Permits jumped for the second month in a row, increasing to 2,702. That is the highest monthly total since last December. Minnesota’s home building market, like the national market, continues to run strongly with near record low mortgage rates helping to boost demand for new homes.
Adjusted Initial Claims for Unemployment Benefits (UB) continued to decrease in July, dropping to 104,500. The rate of decline slowed, however, in July, and initial claim numbers remain at historically high levels. July’s claim level was five times the monthly average before the pandemic hit. Minnesota’s labor market is gradually healing, but thousands of workers are still losing their jobs each week.