State shutdown pushes unemployment rate to 7.2 pct.by Martin Moylan, Minnesota Public Radio
St. Paul, Minn. — The rise of Minnesota's jobless rate in July reflected the layoff of some 20,000 state employees when much of the state government shut down and led to confusing interpretation of the state's unemployment.
There was some encouraging news on the jobs front for the state, as private employers added thousands of jobs.
But the state shutdown made things look worse than they are, said Steve Hine, the top labor market analyst at the state Department of Employment and Economic Development.
"It's a very confusing and volatile month," he said. "Of course the government shutdown has introduced a lot of wild swings in both the unemployment and employment numbers."
Minnesota's official jobless rate jumped four-tenths of a percent in July to 7.2 percent.
Hine said unemployment was actually worse - about 7.6 percent. He said the lower count comes from a mandatory federal formula for calculating unemployment - a formula that didn't work so well for July. There's a similar hiccup in the calculation of total jobs, Hine said.
Officially, Minnesota lost nearly 20,000 jobs from June to July. But Hine said the net job loss was closer to 13,000. That stems from choices federal number crunchers made when they were filling in for the state crew that was laid off for the shutdown.
Private sector job growth in July was better than the official number because federal estimates do not include some 7,000 retail jobs Minnesota gained in July. When those numbers are included, the number of jobs added by private employers grows from 8,200 to 15,000.
A bright spot was manufacturing, which added 3,500 jobs in July. There were also sizeable gains in professional and business services, the financial sector and education and health services. The decline in the hard-hit construction sector is slowing.
The private sector has been on a bit of roll lately, Hines said, adding an average of more than 10,000 jobs in each of the past three months. But he worries about that upward trend continuing. Given increased uncertainty about the U.S. and global economies, ongoing discord about resolving the nation's debt and budget issues and other economic gremlins could hurt employment growth.
"We've seen some good solid numbers coming out of the private sector over the last few months but at the same time we're now facing some increased threats," Hines said.
Other analysts agree.
Scott Anderson, a Wells Fargo economist, estimates there is at least a one-in-three chance of a recession within the next year.
Job growth is nowhere near where it has to be to recover the approximately 150,000 jobs Minnesota lost in the recession, Anderson said. The state has only recovered about a third of the jobs that were lost.
"So we have a long way to go and there's a lot of negatives on our radar screen and not a lot of positives," he said. "Things could soften from here and the labor market could deteriorate a bit."
That concern is shared by economists at the Federal Reserve Bank of Minneapolis. They had predicted job growth of nearly two percent in Minnesota next year. But a recent informal survey of business leaders has the bank's economists thinking that forecast may be pretty optimistic.
- All Things Considered, 08/18/2011, 5:20 p.m.