A surge in hiring at the end of 2012 helped Minnesota post its strongest year of job gains in the new millennium.
The state created 51,900 jobs in the past 12 months, more than it has in any year since 1999, aided by robust growth in November and December, the state Department of Employment and Economic Development said Thursday.
"We have developed some momentum in the last couple months that was sorely lacking throughout much of the middle eight months of the year, especially during the summer," said Steve Hine, labor market economist at the department.
Annual job growth in Minnesota was 1.9 percent, beating the 1.4 percent national average. National job gains had been outpacing the state through the end of 2011 and the first half of 2012, but Minnesota has now started creating jobs faster than the rest of the country.
Employers added 9,100 jobs in December, with retail and health care leading the way. November job gains were also revised upward, showing the state added 21,000 jobs in the past two months.
The state's unemployment rate fell to 5.5 percent, from 5.6 percent in November. And in a subtle but significant development, the average workweek in the state grew by half an hour in December.
That increase is the equivalent of about 35,000 new jobs, Hine said, and a signal that employers are reaching the point where they may need to hire more.
Thursday's report offers a first look at 2012 as a whole. Despite a midsummer lull, the job market posted gains in all categories except natural resources and mining, non-durable manufacturing, management, back-end business jobs and federal government work.
The latest data shows that Minnesota has recovered 111,000 of the 156,000 jobs lost in the recession. That number will likely prove to be higher when the state releases revised numbers in March, Hine said.
Health care providers did the most hiring in 2012, but construction, technical and scientific professions and durable goods manufacturing all posted solid gains.
Graco Inc., a Minneapolis-based maker of pumps and sprayers, has gotten a boost from recent strength in the housing market, said Bryce Hallowell, a company spokesman. Its stock reached an all-time high in December, and the company has 50 openings in the Twin Cities.
"We are seeking skilled labor for the factory and a wide variety of engineering, finance and other office positions," Hallowell said.
The latest Minnesota jobs report comes amid a wave of positive news about the national economy that helped push the Dow Jones industrial average briefly Thursday to its highest level since 2007.
Holiday retail sales were 4.7 percent better than in 2011, according to the Census Bureau, and the rate of housing starts rose 36 percent over the same period. The number of initial jobless claims a week ago was the lowest since 2008.
But cautionary signs remain in Minnesota's job market.
The number of temp workers in Minnesota, generally seen as a reliable leading indicator, fell in December and was flat in 2012 as a whole. It will be a number to watch in coming months, Hine said.
"Over the last two recessions, that sector turning negative in over-the-year growth has pointed to a recession," he said.
Also, the goods-producing job market, like the housing market, still has a long way to go to return to its prerecession strength. Construction and manufacturing, despite gains in 2012, still employ 57,700 fewer people in the state than they did at the beginning of 2008.
Bill Blazar of the Minnesota Chamber of Commerce said manufacturers that supply other manufacturers or the construction industry have done well in recent months. But companies that build products for oil, gas and mining companies have slowed, perhaps because of overbuilding worldwide.
And Blazar believes the surge in retail hiring in November and December -- which turned out to be the largest since 2007 -- could reflect what was misplaced optimism about the holiday shopping season.
"I don't know that the retailers had a good Christmas, but they staffed up for a good Christmas," he said. "I still think this recovery is kind of business or industry specific. Overall the economy is growing, and overall we're creating more jobs, but it's not across the board."
Adam Belz • 612-673-4405 Twitter: @adambelz