April: 3,100 fewer jobs in Minnesota

Minnesota employers cut 3,100 jobs in April, mostly in the retail, construction, hospitality and government sectors, state officials announced Thursday.

April's jobs loss marked the first monthly decline since November as only three out of 11 sectors reported job gains last month -- manufacturing, financial activities and health and education.

The clearly disappointing April report, which followed a flat March and significant job gains in December, January and February, left economists speculating about possible explanations ranging from the unusually warm winter to statistical methods used to seasonally adjust the figures.

Warm weather sped up restaurant, construction and golf club hiring earlier in the year instead of in March and April.

"If I have to take the job numbers at face value, then it looks like we are in a sluggish environment and that the labor market could be weakening over the last three months," said Wells Fargo senior economist Scott Anderson. "If true, we are not super-surprised because we are also seeing this as a national trend."

But calculations that make adjustments for such seasonal changes, may have gone too far and undercounted job gains, Anderson said.

Meanwhile, the unemployment rate in April, which is derived from a separate survey, dropped 0.2 percentage point to 5.6 percent. Minnesota's unemployment rate remains well below the 8.1 percent national rate. State officials attributed Minnesota's declining unemployment rate to baby boomers retiring and to more discouraged workers ending job searches.

Hine blamed the under-reporting of jobs on monthly employer-survey sizes that were too small and on new calculations used by the federal Bureau of Labor Statistics. Hine said annual benchmark revisions will be done by the federal government, but not until around March 2013.

"I am very discouraged by the underestimation that is becoming more and more apparent in this monthly survey," Hine said.

Year-over-year, Minnesota officially gained 14,700 jobs, for a growth rate of 0.6 percent. That compares with U.S. job growth of 1.3 percent over the past 12 months. But Hine said that a review of more complete administrative records suggests that Minnesota may have gained about 55,000 jobs in the last 12 months, for a 2.2 percent growth rate.

"I think it's significant that, as we started to look at recently available data from our new unemployment insurance program, we are seeing that there is quite a discrepancy between our monthly estimates and what these administrative reports are suggesting," Hine said.

University of St. Thomas Economics Prof. Mel Gray also has said that he believes job numbers are skewed by overly aggressive seasonal adjustments that underestimated jobs gained during the unusually warm winter and spring.

Minnesota showed 3,400 job losses in the trade, transportation and utilities sector, with most of those declines coming from the retail trade.

"I am kind of surprised with the weakness we are seeing in the retail trade numbers considering what is happening in sales," which are up, Hine said.

Jeanne Boeh, chair of the Economics Department at Augsburg College, said, "Unfortunately, this [entire] report just confirms we are not there yet. Traditionally, Minnesota employment numbers have been better than the nation's and we still are in terms of the unemployment rate. However, our current rate of employment growth remains below the national average. This will be worrisome if it continues."

Mark Phillips, the commissioner of the Minnesota Department of Employment and Economic Development, said "Despite the job losses last month, most signs point to employment growth over the long term. The economy continues to move in a positive direction, with fundamentals remaining relatively strong and better than a year ago."

Separately, the U.S. Labor Department reported that initial claims for unemployment insurance for the week ending May 12 were unchanged at 370,000.