State experts wary of jobs uptick

Friday's stronger-than-expected national employment report is seen as encouraging, but not cause for champagne.

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Remmele Engineering’s medical tech division has been increasing production of medical devices and adding workers at its plant in Big Lake, Minn.

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Friday's stronger-than-expected national employment report is stoking hopes that Minnesota's jobs machine is kicking into gear as well.

The state jobs tally for December isn't due out until later this month, and a string of confusing monthly reports about the strength of Minnesota's labor market has turned the upcoming report into something of a nail-biter -- did the state add jobs, and if so, how many?

Minnesota gained jobs in August, in part because workers sidelined by the three-week state government shutdown in July returned to work. But Minnesota shed 22,900 jobs in the months that followed, even as its unemployment rate fell to 5.9 percent in November.

So news that the country's employers added a solid 200,000 jobs in December was cause for optimism. Steve Hine, research director at the state Department of Employment and Economic Development, said 200,000 is "still slogging along" but that he's upgrading his expectations for Minnesota's upcoming report.

"It's always a positive sign for our upcoming release when the national numbers come out as decent as these do," said Hine, who also thinks the state's jobs engine is performing better than recent monthly data suggests.

Not that anyone is expecting it to roar. Amid high anxiety about the economy and weak demand, employers have been cautious about new investments and hiring. Job growth has been meager relative to the army of people on the sidelines of the workforce.

The downside to Friday's positive report, Hine said, is that it could "take the heat off our policymakers" to stimulate the economy and, in particular, hiring.

"There's still far too much slack in our labor markets," Hine said.

Nationally, employer payrolls grew about 1.1 percent last year through November; in Minnesota, they grew just 0.6 percent, according to IHS Global Insight. IHS predicts that at its current trudging pace, Minnesota won't return to its previous peak in employment, before the bloodletting began, until mid-2014.

IHS Global Insight regional economist Troy Walters called the gain of 200,000 jobs "mildly encouraging, but not nearly enough to put the nation on a quick recovery path to full employment." He said he expects Minnesota "will continue to underperform the nation in the very-near term."

Wells Fargo & Co. senior economist Scott Anderson, too, took a guarded view of Friday's report.

"It's been two steps forward and one step back through this whole slow expansion," Anderson said.

Nationally, retail and manufacturing job gains led growth for December, but Anderson said he fears the effects will be short-lived. Many of the retail jobs were likely short-term seasonal hires that, even with the usual seasonal adjustments to the numbers, will likely be revised down. He said he also expects U.S. exports to slow and the country's gross domestic product to rise just 2 percent this year thanks to Europe's debt problems and slowing growth in Asia. Anderson said he expects both to dampen U.S. exports, and that will affect Minnesota manufacturers.

He expects 2012 to be a "déjà vu year."

"We will start out strong and then slow down in the middle and slowly build momentum in the last part of the year," he said.

State economist Tom Stinson said he wanted to see stronger manufacturing job gains in the national report.

"Yes, 23,000 manufacturing jobs is better than losing manufacturing jobs but it's certainly not where we want to be," he said. "That news has not been super. We still have a long ways to go to get back to more normal levels."

Locally, medical device manufacturing has been a bright spot.

New Brighton-based Remmele Engineering, which makes components for large publicly traded medical device companies, as well as for clients in aerospace and defense, said the med-tech business is particularly strong. The business unit logged double-digit sales growth right through the recession and has maintained that growth through the erratic recovery, said Vice President John Bowden.

Over the last few months Remmele's had a hiring uptick and has put nearly 20 new people on the payroll -- mostly machinists and engineers who work on sophisticated components that go into minimally invasive surgical devices. It's been adding capital equipment and buying machinery.

"We're winning more projects," Bowden said. "There's a lot of activity in the medical-device sector."

Staff writer Susan Feyder contributed to this report. jbjorhus@startribune.com • 612-673-4683 ddepass@startribune.com • 612-673-7725

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