Minnesota adds 10,300 jobs in May; jobless rate lowest in 7 years

Minnesota employers added 10,300 positions last month, the largest gain so far this year and a sign that the outlook is improving for people who need jobs.

Figures the state released Thursday showed particularly strong gains in construction and manufacturing, industries that have lagged in the long economic recovery. Unemployment ticked downward to 4.6 percent.

Steve Hine, the state's labor market economist, highlighted a decline in the number of Minnesotans who are working or looking for work, suggesting that baby-boomer retirements are starting to cut into the state's talent pool.

While the trend is national, it is hitting Minnesota earlier than other states because the state's unemployment rate is well below the national average, which is 6.3 percent.

Hine said the long-predicted shrinking of the labor force indicates that people looking for work will find the search becoming easier as employers begin to face a shortage of workers.

"Businesses that are going to want to expand are going to have to compete hand over fist and tooth and nail for qualified workers," he said.

Minnesota companies are watching closely — particularly those needing high-skill workers, said Charlie Weaver, director of the Minnesota Business Partnership, which represents the state's CEOs.

The recession delayed retirement for many baby boomers by slashing home values and 401(k)s. Now that the financial and housing markets are recovering, more people are leaving the workforce, said Tom Stinson, who teaches economics at the University of Minnesota.

"This is just part of what we're going to have to deal with for the next 15 or 20 years," he said. "Without productivity increases, the standard of living is going to stall, or at least not increase as rapidly as we would like."

Because of that, Stinson said, educational shortfalls in Minnesota's minority population could have major economic implications.

"We can't afford to not be taking full advantage of everybody's talents as they're entering the workforce," he said.

May's gains were led by professional and business services, which added 4,100 jobs. The category includes well-paid technical jobs but also back-end business support, janitorial and temporary work.

Over the past 12 months, construction and manufacturing have been the strongest industries in Minnesota, both adding nearly 10,000 positions.

Minnesota has added 45,617 jobs in the past year, a growth rate of 1.6 percent, compared with a U.S. growth rate of 1.8 percent.

Retail, real estate, private education and leisure and hospitality all posted small declines in May. The biggest losses were in the public sector, which shed 1,300 jobs across all levels of government. "The only sector exhibiting a significant decline was government," Hine said.

While April's numbers were revised downward — an initially reported loss of 4,200 jobs was changed to 5,300 — Stinson said May's results are reassurance that the state economy is moving at a steady pace.

"It looks to me like things are as we would like them to be, maybe not quite as strong as we would like, but no big reasons for concern," he said.

The Twin Cities area has added 28,700 jobs over that period for a 1.6 percent growth rate, and Mankato has added 1,102 jobs in 12 months for a 2 percent growth rate.

Meanwhile, Duluth and Rochester have struggled. Duluth has added only 96 jobs over the past 12 months, a growth rate of 0.1 percent, and Rochester has added 438, a growth rate of 0.4 percent.

Adam Belz • 612-673-4405