April drain: Six months of job gains wiped out

All the employment gains of the past six months vanished in April, when Minnesota lost 10,100 jobs. The state unemployment rate also ticked up one-tenth of a percentage point, to 4.8 percent, according to the Minnesota Department of Employment and Economic Development (DEED).

The jobs report was the latest sign that the state's economy is in the doldrums, sparking worries that a turn for the better isn't yet in sight. And there are signs that population growth is slowing, in part because the state is creating too few jobs to attract workers.

Tom Stinson, the state economist, said that the link between population growth and the health of Minnesota's economy is significant and could signal delays in job recovery.

"We need strong job growth if the economy is to pick up," Stinson said. Without an increase in population, thousands of empty houses will remain a drag on a turnaround, he said.

In January, Stinson said Minnesota was in a recession. In the intervening months, following a national trend, the state has witnessed a deepening slump in new home sales, commercial building, new car sales and other bellwethers of economic activity.

Led by declines in construction, manufacturing and government, Minnesota's total nonfarm employment slipped to 2,774,100 last month. It was the lowest seasonally adjusted total since October.

The latest numbers are exactly what economists such as Stinson had feared. Jobs -- like moods -- typically take a rebound in spring, as construction and tourist seasons get underway. This year that boost didn't come.

Still, that probably explains only a fraction of the jobs downturn, said John Fossum, a University of Minnesota labor economist. "Most of it, I would guess, is related to general economic softness," he said.

A recently signed $770 million bonding bill promises to ignite big construction projects around the state, Fossum said.

"You could get a fairly good swing, but not immediately," he said.

Trouble finding work

While new claims for unemployment insurance haven't climbed significantly -- a sign that mass layoffs have been limited -- the number of Minnesotans exhausting their 26 weeks of unemployment insurance has been rising. That's a signal that finding new jobs is taking more than six months for many of the state's jobless.

In the past 12 months, Minnesota has added 19,000 jobs -- or an average of about 1,580 every month, noted Oriane Casale, DEED assistant director of labor market information. "We'd need to add about 2,539 jobs per month to keep up with population growth," she said. "However, there is evidence that [Minnesota's] population is growing slower that the demographer's office projected."

Stinson is particularly concerned about that and about the state's housing slump. "We need to work through that [excess housing] inventory before we see much of a snap-back in residential construction," Stinson said. "We'll work through that inventory more rapidly if we draw more people to come to Minnesota to work."

Only three of 11 major industries showed job gains. But declines in other industries overshadowed the 700 additional jobs in financial activities, 300 more jobs in education and health services, and 200 extra jobs in other services.

Construction lost 3,300 jobs last month. Government employment fell by 2,600, manufacturing was down 1,600 positions and leisure and hospitality lost 1,600 jobs.

On the brighter side, Casale said that the Minnesota job growth rate, comparing April with a year earlier, was 0.7 percent -- or more than double the 0.3 percent national rate in the same period.