Minnesota adds 12,100 jobs in January, jobless rate ticks up

Minnesota has recovered nearly 90 percent of the jobs lost since the Great Recession, as the latest jobs report shows the state's economy is on a roll.

From bars to restaurants to construction firms to manufacturers, more than 12,000 jobs were created in Minnesota during January, according to data released Tuesday by the state's Department of Employment and Economic Development. The state also revealed that 16,700 more workers found work than was previously reported over the past 21 months.

"The Minnesota labor market is staging a robust comeback," said Katie Clark Sieben, the DEED commissioner.

Other economic data point to better times ahead. Home sales and prices have been climbing for months. The state's projected deficit for the next two years has been cut in half. And the number of openings for well-paying jobs in Minnesota rose dramatically in 2012, driven by swelling demand for skilled workers like software developers, mechanical engineers and nurses.

The total available jobs paying $25 per hour or more increased 64 percent last year, as hiring in Minnesota continues to outpace the national average.

"Our economy is on pretty solid footing," said Steve Hine, director of Minnesota's Labor Market Information Office.

January's job gain easily trumped December, when employers added 9,000 positions. Trade, transportation and utilities led the pack with 4,100 new jobs added, followed by construction, with 2,600 positions gained. Leisure and hospitality businesses, which include restaurants and bars, hired 1,700 new workers during the month, while the government and other services each added 900 positions.

"Most have added revenue and about a third are hiring," said Josh Bushard, a partner with accounting firm Grant Thornton, referring to his local manufacturing and hospitality clients. Bushard said hotels and restaurants "have come back strong" as consumers have loosened the purse strings and are eating out instead of making dinner at home. Business travel has also increased, which bolstered the segment.

The surge in jobs last month also comes despite recent economic fears, including sequestration cuts, higher gas prices and the payroll tax hike. Ernie Goss, director of Creighton University's Economic Forecasting Group, said such economic worries are what makes last month's gains even more impressive — and surprising.

"I would have suspected that trade [both retail and wholesale] were performing at something less than stellar due to the tax hike on Jan. 1 and increasing fuel prices," Goss said.

But even retailers managed to add jobs in January, despite the end of the busy holiday shopping season and smaller paychecks due to the tax increase.

No question, Minnesota's economy is doing well, Goss said. "Our surveys over the past several months for Minnesota show an expanding, albeit slowly, economy." The state's agriculture and housing sectors have had "very positive impacts on the Minnesota economy," Goss said.

But while the state's economy is on the mend, economists warned Tuesday that it could take a while for the unemployment rate to stabilize. An improving economy means that thousands of jobless workers will resume their searches again and will be considered part of the official labor force. If there aren't enough positions for them to fill, then unemployment could jump.

Already, Minnesota's unemployment rate rose to 5.6 percent in January from a revised 5.4 percent in December. Nationally, unemployment is 7.9 percent.

Hine noted that a rising or fickle unemployment rate is often one of the early consequences of an improving economy. Over time, the rate should decline as more jobs open.

But Hine cautioned that the recent federal sequestration budget cuts present a sizable unknown to Minnesota's economy. "It certainly presents a threat. Whether it is a big enough threat to derail this momentum that we have? I would not want to hazard a guess," Hine said.

Minnesota will release February job numbers on March 21.