Industrial Analysis
August Overview
Nonfarm employment grew by 4,200 jobs in June mainly from gains in Educational and Health Services and in Government. Six of 11 supersectors posted job gains for an overall monthly increase despite sizeable losses in Other Services, Manufacturing, and Construction. On an annual basis 35,100 jobs were added—an increase of 1.3 percent. This is down slightly from 1.5 percent in May. The month of June experienced an unadjusted monthly increase of 0.9 percent compared to a very strong 1.2 percent increase a year ago. This largely accounted for the change in over-the-year growth rate. Six supersectors added jobs and five lost jobs. Educational and Health Services added the most jobs (+14,600) and had the fastest rate of growth. Trade, Transportation, and Utilities added 9,900 jobs followed closely by Professional and Business Services with 9,500 additions. Manufacturing posted the greatest number of losses at -5,100.
Natural Resources and Mining
There was a loss of 100 jobs in Natural Resources and Mining for the month. This was the first employment drop since February. Over the past 12 months the supersector lost 100 jobs, all in mining.
Construction
Construction employment fell for the fourth consecutive month, down 1,200 jobs in June, to post a seasonally adjusted level of 125,800. All three of the major component industries showed poor growth for the month but most of the loss came in specialty trade contractors with construction of buildings also contributing significantly to the loss. The estimates indicated an annual loss of 1,500 in June, with about two-thirds of the loss coming in residential building construction. Nearly all of the loss is accounted for by declining permits for single family homes. Home sales are also well down for the Twin Cities area. According to area realtor associations, in the first half of 2007 the number of closed sales was off 16.0 percent compared to 2006, and the median price for a single-family unit was down 2.2 percent (J. Buchta, “Home Sales Slipping”, StarTribune 7/12/’07).
Manufacturing
Manufacturing employment fell by 1,500 on a seasonally adjusted basis in May. This marks the seventh month in the past 10 that employment has declined in the supersector. Durable-goods manufacturing employment fell by 2,100 in June, and five times in the last eight months it has dropped by more than 1,000. By comparison small increases have been commonplace in nondurable-goods manufacturing in recent months. In June all the estimated detailed industries in durable-goods manufacturing showed negative results except furniture and related; medical equipment; and navigational, measuring, electromedical, and control instruments. The small gain in nondurable-goods manufacturing came outside of food manufacturing. The rate of annual growth turned negative in April and has worsened to reflect a loss of 1.4 percent in June. There were substantial annual declines in transportation equipment, in wood product, in machinery, in computer and electronic, and in furniture and related manufacturing. The loss of jobs in Minnesota is now comparable to the 1.3 percent decline in the United States as a whole.
Trade, Transportation, and Utilities (TTU)
Growth in retail trade and in transportation, warehousing, and utilities produced a modest employment gain of 700 for the Trade, Transportation, and Utilities supersector. Retail trade added 300 jobs with food and beverage stores showing particular strength for the month. The seasonal decline in transportation, warehousing, and utilities was somewhat smaller than usual, yielding a seasonally adjusted gain of 400 for the month. Over-the-year growth was up slightly to 1.9 percent. Most of this growth came from retail trade with 8,700 additional jobs. Large annual gains were posted in food and beverage and in general merchandise stores. Given the weakened housing market, the large decline in building material and supplies dealers is not surprising. Wholesale trade posted a gain of 900 jobs with most gains in durable-goods wholesaling.
Information
The addition of 200 jobs in Information ended three consecutive months of decline for the supersector. The gains experienced came outside of publishing and telecommunications. The fairly large declines of the previous three months have contributed substantially to the 3.0 percent rate of annual decline in the supersector. About 1,100 of this loss was in telecommunications.
Financial Activities
Employment in Financial Activities continued to seesaw in June, falling 300 after a gain of 400 in May. This is the eighth month of alternating gains and losses. Finance and insurance was the locus of the month’s decline, experiencing a drop of 500 jobs. The losses came mainly from credit intermediation companies. On an annual basis the supersector still showed substantial gains, up 3,200 since last June. By far the largest source of the increase was insurance carriers where employment increased 1,900. The rate of annual growth for insurance carriers has improved substantially since January with growth now measuring 4.9 percent.
Professional and Business Services (PBS)
Strong gains in management of companies and in administrative and support services were enough to produce a gain of 500 in the supersector despite a sharp decline in professional, scientific, and technical services. The decline of 1,100 in professional, scientific, and technical services reverses the unusual gain experienced in May when unadjusted data showed an increase in a month usually marked by a loss. The gain of 900 in management of companies is a welcome change after five consecutive monthly declines. Administrative and support services added 700 jobs, the ninth month of growth in the last year. The strength of administrative and support services is evident in the annual increase of 7,400 for the industry grouping. This accounts for the majority of the 9,500 new jobs added to the supersector in the past 12 months.
Education and Health
Education and Health added 5,200 jobs to post the largest monthly increase. This gain was fairly evenly split between private education and health and social assistance. A good deal of the gain in private education was in private colleges and universities where the seasonal decline was approximately 6 percent below the average decline for the previous 10 years. Gains in health care and social assistance came mainly in hospitals and ambulatory health care. The rate of annual growth moved up to 3.6 percent in June from the smaller-than-usual seasonal decline. The annual growth of private colleges and universities and hospitals was much improved when compared to May.
Leisure and Hospitality
The estimates showed a small gain of 500 jobs in Leisure and Hospitality. All of the gains came in accommodation and food services as arts, entertainment, and amusement showed a very slight decline for the month. Over-the-year growth for the supersector equaled 4,400 jobs and was the fourth best result in terms of numeric gains over 12 months. Food services and drinking places accounted for the annual gains.
Other Services
All three of the major component industry groupings in Other Services posted poor results in June. In particular religious, grantmaking, civic, and professional organizations experienced very weak job growth. The strong decline in the monthly data caused over-the-year growth to decline to -2.0 percent. Every component industry showed an annual loss with about 65 percent of the losses occurring in religious, grantmaking, civic, and professional organizations.
Government
Unusually small seasonal declines in state and local government education and substantial summer increases in non-education local government created 2,600 additional jobs in June. The usual decline for state government education is about 12.4 percent, placing the drop of 8.9 percent well below the decline usually experienced in June. Over-the-year growth increased from 0.7 to 1.0 percent largely on the strength of state government education which jumped sharply to 4.4 percent. It remains to be seen whether seasonal declines in public education will be larger in future months to compensate for the relatively limited summer layoffs experienced thus far in 2007.
| Seasonally Adjusted Nonfarm Employment (In 1,000's) | |||
|---|---|---|---|
Industry |
June |
May |
April |
| Total Nonagricultural | 2,790.6 | 2,786.4 | 2,779.8 |
| Goods-Producing | 474.5 | 477.3 | 477.9 |
| Natural Resources and Mining | 5.9 | 6.0 | 6.0 |
| Construction | 125.8 | 127.0 | 128.6 |
| Manufacturing | 342.8 | 344.3 | 343.3 |
| Service-Providing | 2,316.1 | 2,309.1 | 2,301.9 |
| Trade, Transportation and Utilities | 539.2 | 538.5 | 537.4 |
| Information | 55.3 | 55.1 | 55.7 |
| Financial Activities | 183.9 | 184.2 | 183.8 |
| Professional and Business Services | 328.4 | 327.9 | 327.3 |
| Educational and Health Services | 423.7 | 418.5 | 415.3 |
| Leisure and Hospitality | 248.9 | 248.4 | 248.7 |
| Other Services | 116.4 | 118.8 | 119.1 |
| Government | 420.3 | 417.7 | 414.6 |
| Source: Current Employment Statistics, Department of Employment and Economic Development, 2007. | |||
* 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.
Source: Current Employment Statistics, Department of Employment and Economic Development, 2007.