Minnesota added 15,500 jobs during January, a hiring boost that's helped the state recover almost half the jobs lost since the depths of the Great Recession.
The state unemployment rate was 5.6 percent for the month, down from 5.7 percent in December and well below the national rate of 8.3 percent.
"January's numbers do give us some hope that things are looking up," said Scott Anderson, Wells Fargo senior economist.
Led by professional services and health-care companies, Minnesota so far has recouped 74,900 of the 156,000 jobs lost since the recession hit bottom in September 2009. For much of 2011, monthly job reports appeared to show little sustained job creation. But the annual revisions released Thursday show employers revealed a slow-but-steady activity.
In the past 12 months, the state gained 29,000 jobs, for an overall growth rate of 1.1 percent. That's below the national growth rate of 1.5 percent.
But Steve Hine, director of Minnesota's Labor Market Information Office, said job vacancies in the state rose 48 percent in the fourth quarter, while initial claims for jobless benefits in January stayed below 25,000.
"Both of those numbers are right about at those thresholds that many believe are consistent with sustainable job growth," Hine said.
Connie Wanberg, a professor of work and organizations at the University of Minnesota's Carlson School of Management, said January's jobs report is a promising sign for jobseekers.
"Their personal ability to persist and be optimistic improves when reports are more positive like this,'' she said. "It gives an individual some hope and maybe a renewed feeling of confidence."
The state's private sector has been particularly strong, adding 27,200 jobs in the past two months and 36,846 jobs during the past year, overcoming a financially squeezed government sector that lost 1,700 jobs in January and 7,900 jobs in the past year.
"I think there are some underlying strengths that have not been tapped yet,'' said Charles "Mel" Gray, business economics professor at the University of St. Thomas.
For example, professional and business services had such strong job gains last month that it bodes well for the state's future. The sector gained 5,600 jobs for the month and 18,500 jobs for the year.
State officials also expect the jobless rate to continue to drop.
Other job sectors
In addition to January job losses in the government sector, leisure and hospitality jobs were down by 600. Trade, transportation and utilities jobs were down by 400 and financial jobs also were down by 400.
Other job gains came in construction (up 4,200), education and health services (up 4,100), manufacturing (up 2,400), information (up 1,400), other services (up 800), and mining and logging (up 100).
Gray said that January's unusually warm, dry weather probably boosted construction jobs for the month while hurting ski resorts, ice fishing and other leisure businesses that depend on snow.
"There is usually an upside and a downside to a mild winter," Gray said, noting that advancing some projects in the winter means we may not see construction job growth in April or May.
Recent revisions to seasonally adjusted construction employment saw gains from residential construction and stronger demand for specialty trade contractors. That left the industry with 2,900 more workers than 12 months ago.
The labor force participation rate fell slightly from 71.5 percent in December to 71.3 percent in January as about 5,000 workers left the workforce. Hine attributed the drop to a possible spike in retiring baby boomers or discouraged workers who stopped searching for work.
"There continues to be high unemployment and high long-term unemployment," Hine said. In the future, he expects boomer-related demographic changes to affect labor participation rates.
Anderson, the Wells Fargo economist, called the state's lower labor participation rate numbers "another sign that things may not be as solid as the January numbers may have you believe. Usually the labor force participation rates pick up when the labor market strengthens."
For the past 12 months, eight of Minnesota's 11 major industrial sectors added jobs.
The figures come after the state revised monthly reports with a more complete set of payroll and unemployment data.
Also Thursday the U.S. Labor Department reported that initial claims for unemployment for the week ending Feb. 25 were 351,000, a drop of 2,000 from the previous week's revised figure of 353,000. The four-week moving average was 354,000, a decrease of 5,500 from the previous week's revised average of 359,500 and the lowest since early 2008.
Expected 1.3 percent growth
Separately Thursday, economists at the Federal Reserve Bank of Minneapolis said they now expect Minnesota employment to grow 1.3 percent in 2012. The Fed now forecasts that state unemployment will drop to 4.9 percent by fourth-quarter 2012.
Dee DePass • 612-673-7725