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Will we see any Minnesota manufacturing job growth this year?

Posted at 5:00 PM on January 19, 2010 by Paul Tosto (2 Comments)
Filed under: Jobs & unemployment

We'll get our next good look at the state's economy on Thursday when officials release Minnesota's jobless rate for December While the rate might improve from November's 7.4 percent, we should hold off on the applause.

The message from economists the past month has been pretty clear: It'll be slow going in Minnesota during 2010.

The Federal Reserve Bank of Minneapolis a few weeks ago said job growth projections were looking good good for the Dakotas and Montana for 2010. Minnesota and Wisconsin, not so much. It really hammered home the idea that the jobs recovery will be showing up later here than in other states.

A few weeks after that came data from Creighton University's survey of Minnesota supply managers. Creighton uses it to create a Minnesota leading economic indicator of business conditions.

Creighton's indicator sees expanding economic conditions for the first half of 2010. But manufacturing, so crucial to the state's economy, will be negligible.

"While I expect the state to grow overall jobs by 0.4 percent in the first half of 2010, manufacturing job growth will be nil as producers grow output via productivity gains," said Creigton economist Ernie Goss.

Goss also noted: "Over the past decade, Minnesota lost more than 100,000, or 25.6 percent, of its manufacturing employment. "

Things aren't as bad as they were. Year-over-year job losses in Minnesota manufacturing totaled 36,500 in November. Those losses had topped 40,000 in prior months. But it's a long road back.

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Comments (2)

Mr. Goss has pretty much described the new reality: those manufacturers that remain may make strategic hires here and there, but any increase in manufacturing will be a result of productivity gains.

I would also add to that the unending pressure from Wall Street analysts who punish publicly-held manufacturers that do not live up to their own myopic expectations. All too often these days, manufacturing has to move outside the U.S. to keep the stock price up, investors happy and management employed. Even moving highly skilled, highly paid manufacturing jobs into "right to work" states may not be enough to satisfy Wall Street.

Posted by John O. | January 20, 2010 7:31 AM

John, thanks. I think manufacturing represents 10-15 percent of Minnesota's economy so it's a big deal. The good thing about productivity gains is that they typically lead the way out of recessions. It's a positive sign for the overall economy but it doesn't mean that jobs will follow.

Here's some pretty interesting research along those lines by Tim Kehoe, who's affiliated with the Minnepolis Fed: http://bit.ly/8WAN2Q.

Paul / MinnEcon

Posted by Paul Tosto | January 20, 2010 1:54 PM