State loses 4,100 jobs in December, jobless rate flat

Minnesota employers continued to cut jobs in December, but the state's unemployment rate stayed flat, according to new economic numbers released Thursday.

The state lost 4,100 jobs last month, while unemployment stayed at 7.4 percent. It remains 2.6 percentage points below the national rate, which also went unchanged in December. But the fact that 8,000 Minnesota workers stopped seeking employment in December made the state unemployment rate look less encouraging.

"Recoveries can be bumpy, they're not always a straight line," said Dan McElroy, commissioner of the state Department of Employment and Economic Development. "I would have liked to have seen a positive job indicator. Those aren't the facts."

Officials also revised the number of jobs added or lost in November. The original estimate was 2,000 jobs gained, but the revised number shows a loss of 1,500 jobs. Despite going from a gain to a loss, McElroy said it's a relatively small change.

Despite the disappointing job numbers, state economic officials were encouraged by a few indicators. Initial unemployment claims were down in December, and the number of job openings listed on MnWorks.net continues to rise with 21,000 jobs listed this week. That's the highest it's been since August 2008, McElroy said.

Another indicator economists study for signs of recovery is the number of temporary jobs being added. After a few months of gains, that number was fairly steady in December, said Steve Hine, director of the state's Labor Market Information Office.

Hine said that while December's job numbers were disappointing, they should be put in perspective. Hine said a year ago, between November and January, Minnesota lost 50,000 jobs.

"We're not gaining jobs yet, but we're losing them at a much, much slower rate," he said.

Many economists say despite continued job losses, last fall's growth in the nation's gross domestic product means the economy is recovering.

But Ann Markusen, an economist at the University of Minnesota, said the production gains don't guarantee the economy is on the mend.

"I don't think it's a recovery. Production has been going up, but production has been going up without jobs going up -- with actual continued job loss," she said. "That really is deepening recession."

Large numbers of people losing the workforce, like what Minnesota saw last month with 8,000 giving up on looking for work, is also more typical of a downturn than a recovery.

"We have not seen signs of a robust recovery yet that would be sufficient to attract those people that have been on the sidelines," Hine said. "We are seeing some leading indicators that suggest that that could be around the corner, but we haven't seen that yet."

Toby Madden, a regional economist with the Federal Reserve Bank of Minneapolis, said the economy faces strong headwinds, given tight credit.

"A year ago we surveyed banks and found out that credit conditions had tightened," Madden said. "Then in November, we surveyed businesses and found out that they had tightened further, and reports are still indicating that things are pretty tight on the financing side."

Madden said that means fewer projects move forward. As a result, there's less new hiring.

Five sectors of the economy added jobs last month, including professional and business services with 3,900. Manufacturing, information, government, and logging and mining also showed gains.

The biggest job losses were in trade, transportation and utilities with 3,800 jobs lost. Jobs in construction, financial activities, leisure and hospitality, other services, and education and health care were also down.

Also Thursday, officials revised the number of jobs added or lost in November. The original estimate was 2,000 jobs gained, but the revised number shows a loss of 1,500 jobs. Despite going from a gain to a loss, McElroy said it's a relatively small change.