Jump in jobs for January met with an eye to future

Minnesota in January posted its largest employment gains since May, a rise of 8,500 jobs, with more hiring than firing in seven of 11 major sectors. The state's jobless rate also fell, to 4.5 percent, from 4.7 percent in December.

But with talk of recession in the air, job market watchers were cautious about proclaiming a turnaround in employment in the state.

"One month doesn't a trend make," said Steve Hine, labor market information director at the Department of Employment and Economic Development (DEED).

"January has been historically a strong month," he said. "This January has continued that trend." He noted that January 2007 and January 2006 both showed jumps in jobs (up 5,400 at the start of last year and 10,400 more a year earlier), only to be followed by employment downturns.

"An 8,500-job gain is a very strong job growth rate," Hine said. "The question is, to what extent will this persist into the future?"

Hine's boss sounded more optimistic, however.

"I am encouraged by the strong start to the year and hope this momentum continues," DEED Commissioner Dan McElroy said in a prepared statement.

State economist Tom Stinson said that it will take a couple of months "before we can see if the January numbers are the start of a new trend or just an anomaly in the data."

The gain of 8,500 nonfarm jobs was the largest since the state added 7,200 jobs in May. In between, the job market swung between gains and losses, recording a 2,300-job drop in December.

A periodic revision in job data by the U.S. Bureau of Labor Statistics, incorporated in Wednesday's state employment numbers, found job growth was slower in early 2007 and faster later in the year than previously thought. The revised count showed Minnesota did better on the jobs front last year than previously thought.

The state gained 6,200 nonfarm jobs from December 2006 to 2007. The numbers, before the revision, showed a job loss of 350.

Stinson and Hine both said that peculiarities in the seasonal adjustment of jobs data played a significant part in the job gains reported for January.

For instance, the latest report showed 2,100 more construction jobs in January. But Stinson noted that, over the past year, construction posted a loss of 5,900 jobs. That means the gain in construction jobs in January, after seasonal adjustment, simply may reflect fewer layoffs at the start of 2008 because more jobs than usual already were lost in 2007.

"There are significant seasonal adjustment problems," Stinson said. "For us, the real bottom line is, what happens to construction employment in March and April? If it rebounds, that's really good news for the Minnesota economy. But if it doesn't rebound, it means that we're in for at least six more months of tough times."

After the revisions, the largest gains from December to January were in professional and business services, construction and trade, transportation and utilities, with smaller increases reported for government, financial activities, manufacturing and information industries.

The categories showing job losses were in mining and natural resources, education and health services, leisure and hospitality, and other services.

Mike Meyers • 612-673-1746