Wells Fargo Securities Economics Group: Minnesota Sees Steady Growth Year-Round
Minnesota’s labor market remains one of the healthiest in the nation. The state added 62,500 jobs over the past year, with improvement in every major employment sector. Notable gains were seen in healthcare, professional & business services and wholesale & retail trade, which added 13,400, 12,400 and 12,400 jobs, respectively. The information sector posted the largest percentage point gain, but the rise comes off of a relatively small base, producing a total of 2,200 jobs in the past year.
Minnesota’s unemployment rate held firm at 5.5 percent in February and is currently 2.2 percentage points below the national rate. The state also enjoys a significantly higher labor participation rate than the nation, which stood at 70.9 percent in February. Still, like the nation, the participation rate continues to slip and is now at levels not seen since the early 1980s.
The Bureau of Labor Statistics recently released its annual revisions to nonfarm employment data, which revealed that Minnesota added 18,000 more jobs than previously reported between March 2011 and December 2012. One caveat to note from this report is that the accelerated job growth contributing to this gain took place in 2011 and early 2012, while estimates for job growth were more muted in the latter half of last year. This potential slowdown appears to have reversed at the start of 2013. Year-over-year growth in February jumped to 2.4 percent, the largest gain since September 2011. Hiring may have lost some momentum at the end of 2012 due to worries over the fiscal cliff, but the slowdown appears to have been temporary, and job growth now appears to be on a stronger trajectory.
The Twin Cities Hold the Key to Minnesota’s Gains
The Minneapolis-St. Paul metro area has seen steady employment growth over the past year, with nonfarm employment up 2.4 percent. The Minneapolis-St. Paul metro area comprises 11 counties in Minnesota as well as two border counties in Wisconsin and accounts for nearly 65 percent of Minnesota’s employment base. In line with the state, Minneapolis’s job gains have been fairly broad based, with strong gains in business and professional services, healthcare and retail trade. Not only has the Minneapolis area added jobs at a faster rate than the nation but the quality of jobs being created is also much better. A larger proportion of Minneapolis’s job gains have come from higher-paying jobs in the service sector, such as professional, scientific and technical services, while relatively fewer jobs have been created in lower-paying sectors such as leisure and hospitality and retail trade.
Annual revisions to the Minneapolis’s metro area employment show that employment gains were underestimated by 23,300 for the March 2011 to December 2012 time period, which means Minneapolis accounted for more than 100 percent of the upward revision to the state’s data. This means that earlier estimates for job growth in the rest of the state had been overstated.
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