Minnesota posted its second straight month of solid job gains in June, driven by summer hiring at schools and local governments.
The state’s employers added 8,500 jobs during the month, and the unemployment rate ticked downward to 4.5 percent, its lowest level since early 2007, according to figures released Thursday by the Minnesota Department of Employment and Economic Development.
“We do continue to see new highs in employment, the number of unemployed Minnesotans continues to fall,” said Steve Hine, a state labor market economist. “We have good reason to anticipate that this growth will continue.”
Job growth in Minnesota over the past 12 months rose to 1.9 percent, matching the national average. Unemployment is now 1.6 percent below the national average of 6.1 percent. Even so, about 136,000 Minnesotans remain unemployed.
The state unemployment rate fell mostly because the labor force shrank for the third straight month as more baby boomers retired. The Twin Cities now has the lowest unemployment rate of any major metropolitan area in the country, which is a result of both above-average job growth and a shrinking workforce.
When fewer people are either working or looking for a job, the unemployment rate falls, and the share of people doing either fell two-tenths of a percentage point in June.
“We’re really going to be starting to enter that 15-year time period where retiring baby boomers are going to be in such large number that it’s going to be difficult to muster much, if any, labor force growth,” Hine said.
Local government led all sectors in June, adding 4,200 jobs split between municipal governments and public schools that appear to be doing more summer hiring, Hine said.
“When local government budgets were extremely pinched and school funding was being squeezed, the most marked consequence in terms of jobs was the dramatic decline that we saw in school employment in the summer months,” he said.
Tom Stinson, an economist at the University of Minnesota, said the difficulties in adjusting the jobs numbers seasonally in May, June, August and September — all months when schools are closing or opening — make it tough to draw conclusions from the June numbers.
“I don’t pay a lot of attention to June jobs numbers because they can be affected by seasonal adjustments, particularly in the local government sector,” Stinson said.
Also, the figures will almost certainly be revised. Job gains in May, initially reported to be 10,300, were revised downward to 7,200 jobs on Thursday.
2014 growth has been slow
The two strong months in a row mark a welcome improvement in what has been a weak year for job growth in Minnesota. Of the 45,800 positions added in the state over the past 12 months on a seasonally-adjusted basis, 35,100 were added in 2013.
Still, said Stinson, the June numbers are encouraging.
“Any time you have a month where you get 8,000 jobs, that’s a good month,” he said.
State and federal government hiring fell on the month. Education and health services added 3,500 jobs. Trade, transportation and utilities added 2,200, financial activities added 600 and professional and business services, logging and mining all added jobs.
Manufacturing lost 900 jobs, while leisure and hospitality and construction were down slightly. Construction’s gains in May also were revised downward, but the trend for that industry is good, with 8,000 new construction jobs over the past 12 months. And the figures don’t take into account independent contractors, Stinson said, a factor that may tend to underestimate the strength of the industry.
“What we could be seeing is more construction activity than is given by the employment numbers,” he said. “All it would take is an increased number of hours by independent contractors.”
The state’s metropolitan statistical areas have all added jobs in the past 12 months, some faster than others. St. Cloud is up 2.8 percent, Minneapolis-St. Paul is up 1.8 percent, Mankato is up 1.6 percent, Rochester is up 0.4 percent and Duluth-Superior is up 0.3 percent.