The Minnesota job market started 2010 with its best month in close to five years, with employers adding 15,600 jobs in what economists and job seekers hope will be the beginning of a long march toward full employment.

The jobs gain for January also dropped the state unemployment rate to 7.3 percent from 7.4 percent in December, well below the national rate of 9.7 percent.

What's more, the percentage of Minnesotans either working or looking for work rose in January while temporary hires, an economic "canary" that often signals recovery, also grew by 5.1 percent in January, the biggest leap in that category since the summer of 2007.

Nearly two-thirds of the broad job categories the state tracks showed improvement in January.

"We're encouraged by the improvement in the labor market," said Commissioner Dan McElroy of the state Department of Employment and Economic Development (DEED).

"The unemployment rate has been trending downward in recent months, but it's still too early to say whether the state economy has reached a turning point."

Heidi Shierholz, labor market economist for the Economic Policy Institute in Washington, D.C., said the latest figures suggest Minnesota may recover sooner than the overall economy.

"Unemployment is going to remain high even into 2011, where it is expected [nationwide] to be 9.5 percent. I think Minnesota could come out of [the recession] sooner," but it still won't be quick, she said.

Discouraged, losing benefits

The extent of the gains that will be needed to get Minnesota fully back to work are still in evidence everywhere.

A recent job fair hosted by Rep. Erik Paulsen, R-Minn., drew 2,000 job seekers who had been laid off across the metro area. One attendee, former RBC Wealth Management employee Jane Southwood, waited in a long line to talk to hearing aid maker Starkey Labs about one of the 40 job openings it had.

"I was laid off in February of 2009, so that's a long time," Southwood said.

About one in seven Minnesotans who would prefer full-time work remain either jobless or can only find part-time work, according to a separate report released Tuesday by the Minnesota Management and Budget Department. It estimated that 22,000 people gave up looking for jobs in January -- almost half again the number of jobs created that month.

"Until there are notable signs that the economic recovery is developing into a self-sustaining expansion, employers in the state will remain cautious about further investing or hiring," the MMB report said.

However, McElroy said the state jobs website -- -- is seeing a surge in job listings in banking and manufacturing. He encouraged job seekers to "redouble their efforts" and seek help from one of the state's 47 workforce centers. Listings also are available by calling 1-888-GET JOBS.

Sometimes jobs are available in unexpected places.

Doug Sprinthall, a manager for Walser Automotive, said the auto dealership group has hired 10 people since Jan. 1 and is looking to hire more. But job applicants are slow to apply, mainly because they fear the automotive industry is unstable, he said.

Of the 11 industrial sectors tracked by the state, eight added jobs in January. Only education and health services and financial activities lost jobs, shedding a respective 700 and 500 positions, according to DEED.

Trade, transportation and utilities, and the professional/business services sectors each added 4,000 jobs, and manufacturers added 3,000 jobs in January. Leisure and hospitality added 1,500 jobs, while "other services" added 900, government added 800 and information services added 500. Logging and mining held steady.

Construction added 2,100 jobs, mostly in areas of water treatment, sewerage and highway construction, helped by federal stimulus money, said Steve Hine, director of labor market information for DEED. But building construction remained weak.

The MMB report predicted that Minnesota will lose another 3,100 construction jobs in 2010. Many workers laid off in construction and the hard-hit retail and manufacturing sectors "will need to retrain for work in other sectors where demand for workers is growing more rapidly," the report said.

Overall, Minnesota lost 75,100 jobs last year, or 2.8 percent of its total. The state had 2.635 million workers as of January.

Job losses hit hardest in manufacturing (down 31,200), trade, transportation and utilities (down 14,300), professional and business services (down 6,800), construction (down 8,200), and leisure and hospitality (down 6,000).

Only education/health services and the government sectors gained jobs, adding 2,700 and 300 respectively in the past year.

Minneapolis Federal Reserve Bank President Narayana Kocherlakota, in a speech Tuesday to business executives, cautioned that jobs tend to be the last piece of a recovery to fall into place.

"Unemployment is notoriously slow to recover" from recession, he said.

Dee DePass • 612-673-7725