After three months of strong job growth, hiring in Minnesota slowed in March and firing -- particularly in the government sector -- increased.
The result was a net loss of 200 jobs and a slightly higher unemployment rate of 5.8 percent, up 0.1 percentage points. The private sector added 1,600 jobs for the month -- mostly in retail stores, bars and restaurants -- but local governments dropped 1,800 workers.
With Minnesota's unemployment rate well below the national rate of 8.2 percent, the March slight dip in state jobs was more of a psychological setback. So far, Minnesota has recovered about 88,000, or 58 percent, of all the private-sector jobs lost during the recession.
Analysts were trying to determine whether the virtual standstill in job creation for the month was a sign that momentum has been lost.
"We saw a raft of weaker data for the nation," Wells Fargo & Co. senior economist Scott Anderson said. Nationally, initial jobless claims rose Thursday for a second straight week. The four-week average of new unemployment claims increased to 374,750, the highest level for the four-week average since January.
Separately, a report from the Precision Metalforming Association showed weaker manufacturing forecasts. And the Federal Reserve Bank of Philadelphia reported weaker growth than anticipated.
Anderson said the March jobs report "more evidence that the labor market recovery is less than robust and we could be seeing a softening of job creation for the second quarter."
"Minnesota's net job loss should probably be regarded as zero,'' said Jeanne Boeh, chairwoman of the Economics Department at Augsburg College in Minneapolis. "It indicates a stall, not a decline. The number of employed stayed essentially unchanged."
University of St. Thomas economics Prof. Mel Gray said the tepid job numbers for March don't necessarily mean recovery has slowed down. "I am absolutely not ready to accept that this is one step back until somebody has dug into these numbers and convinced me that there is no seasonal distortion going on," he said.
Warm weather wrinkles
The latest jobs report is seasonally adjusted to account for changes caused by the unusually warm winter and spring weather, Gray said, adding that he suspects that process could have inflated prior job gains and over-reported job losses in March.
For February, job gains were revised downward from 6,200 jobs to 5,800, state officials said.
Steve Hine, director of the Minnesota Labor Market Information Office, said it is likely that Minnesota's "unseasonably great weather" simply sped up hiring usually reserved for later in the spring. An unseasonably warm January and February prompted earlier hiring in several sectors including construction and leisure and hospitality. That left March with less demand for new workers.
"It was not necessarily a surprise that some of this softness ... is likely to be attributed to some earlier hiring in those seasonably sensitive areas than is typically the case," Hine said.
Mark Phillips, commissioner of Minnesota's Department of Employment and Economic Development, said he still believes that the "underlying fundamentals of the economy remain strong."
Online job postings are up significantly, Phillips said.
The state also saw the labor force participation rate decline slightly during the month as more baby boomers retired.
According to Thursday's job report, it was the retail employers within the trade, transportation and utilities sector who added the largest number of jobs in March at 2,500 positions. After a year of struggling, leisure and hospitality added 1,200 jobs in March, while education and health services gained 200.
In addition to job losses at the government level, manufacturing lost a surprising 1,000 jobs, mostly from factories that processed food or made other "nondurable" goods, Hine noted.
Dee DePass • 612-673-7725