Minnesota's jobless rate drops to 5.7%

Minnesota added 7,900 jobs in December, and the state's unemployment rate has now reached its lowest level in three years.

The jobless rate is now 5.7 percent, down from 5.9 percent in November and well below the U.S. unemployment rate of 8.5 percent. Since August, Minnesota's unemployment rate has fallen 1.5 percentage points, the biggest decline over any four-month period dating back to 1976.

December's boost in hiring crossed several sectors of the state's economy, including business and computer services, education and health care and manufacturing. The positive numbers contrast with the recent run of monthly losses; the state lost 23,300 jobs combined from September through November.

"The state is now consistent with the job gains we saw nationwide," said Wells Fargo senior economist Scott Anderson. "We certainly ended the year on a strong growth, and some of that momentum could carry us into January."

State officials said they were surprised that the state's retail sector didn't report a greater number of net jobs in December. The sector only gained 1,200 jobs. Minnesota Retailers Association President Brian Steinhoff said he also expected more retail hiring.

"The projection was that hiring was really going to be up this year," he said.

For all of 2011, Minnesota gained a total of 25,300 jobs, a growth rate of 1 percent, which is slightly below the U.S. rate of 1.3 percent. State officials noted, however, that the gap between state and nation is narrowing. Both have increased jobs at an average annualized rate of 1.7 percent since the recession hit bottom in September 2009.

"The Minnesota unemployment rate continues to move in the right direction," said Mark Phillips, commissioner for the Minnesota Department of Employment and Economic Development (DEED). "The labor market is recovering at a slow but steady pace."

Throughout 2011, private education and health care companies led job creation in the state (11,000), followed by professional and business services, which added 10,000 jobs. Even the battered construction industry added a net total of 200 jobs for the year. The government sector showed the biggest yearly decline, down 6,100.

Meanwhile, November's job losses were revised upward from 13,700 to 14,100. However, the revision was one of the smallest in months, giving state officials reason to think that the initial reports are becoming more reliable.

The unemployment rate is determined by a survey of households, while the jobs report comes from a survey of employers. In recent months, employers have reported net job losses while the household survey showed that unemployment was dropping. With results running in opposite directions, economists were at a loss to explain why the unemployment rate would decline amid heavy job losses.

"The methodologies that give rise to these numbers do seem to be producing an inexplicable disconnect," said Steve Hine, director of the state's Labor Market Information Office.

The state is doing an annual revision of 2011 job estimates against actual unemployment insurance data, Hine said. The report, due out March 1, "hopefully" will sort this out, he said.

Separately, the U.S. Labor Department Thursday reported that national jobless claims fell 50,000 to 352,000 for the week of Jan. 14. The claims were among the lowest since 2008 and beat consensus estimates.

Minnesota lost 158,300 jobs between February 2008 and September 2009, one of the most painful stretches of the recession, according to the state's monthly employer payroll survey. As of last month, the state regained 45,600 or about 29 percent of those jobs, Hine said.

The state currently employs 2.667 million people, while 167,000 Minnesotans continue to look for work.

"We have a long way to go to a full recovery," Hine said.

Dee DePass • 612-673-772