Minnesota lost jobs in March despite the unemployment rate ticking down

With March's job losses, the state has no longer fully recovered all of the private-sector jobs lost in the pandemic

April 20, 2023 at 4:23PM
The state’s unemployment rate ticked down two-tenths of a percentage point to 2.8%. By comparison, the U.S. jobless rate was 3.5% in March. (Shari L. Gross, Star Tribune file/The Minnesota Star Tribune)

Employers in Minnesota seem to have pulled back last month after adding a robust number of jobs earlier this year.

The state lost 5,700 jobs in March, according to data the Minnesota Department of Employment and Economic Development (DEED) released Thursday.

At the same time, the state's unemployment rate ticked down two-tenths of a percentage point to 2.8%. By comparison, the U.S. jobless rate was 3.5% in March.

"There are some mixed messages in those numbers," interim DEED Commissioner Kevin McKinnon said.

The conflicting data points — job losses at a time of lower unemployment — is because the information comes from two different surveys, one of employers and one of households, that don't always perfectly sync.

Weather might have contributed to the lower job numbers last month, said Angelina Nguyen, DEED's labor market information director.

"We had a snowy winter this year, and it could have impacted how construction and manufacturing [and other industries operated]," she said.

The job numbers are estimates and DEED will revise, she added. And they can often go up and down in the short term.

"This is not an indication of anything bad economically," said Nguyen. "Our unemployment rate is still very low. More people are moving from unemployment to employment. So this is just a natural fluctuation of the data."

McKinnon noted jobless claims in Minnesota have been fairly stable and are in line with what the state typically sees around this time of year.

"There's been some announcements of potential layoffs ... and some others that actually were moving from one location to another," he said. "But nothing generally out of the order from what we would see pre-pandemic."

Still, businesses and consumers alike are feeling the pinch of higher interest rates as it's become more expensive to borrow money to buy a car or get a loan. The Federal Reserve's recent rate hikes are intended to slow the economy to try to rein in inflation.

The job losses in Minnesota recorded in March stand in contrast to the additions of 8,700 jobs in February — a number revised lower — and 14,200 jobs in January.

The uptick in February initially meant Minnesota had fully recovered for the first time all of the private-sector jobs lost in the pandemic. But with the decline in March, the state has now dipped back below that threshold and is a few thousand jobs short of that milestone.

Trade, transportation and utilities led job losses last month with 2,300 jobs. Other reductions included 1,900 jobs in construction, 1,300 jobs in manufacturing and 1,200 jobs in professional and business services.

A few sectors saw positive growth and added jobs: 700 in leisure and hospitality, 600 in education and health services and 400 in government.

"The good news this month is wage growth is coming closer to keeping up with the inflation rate," Nguyen said.

Wages in Minnesota increased 4.5% in March compared with a year ago, just below the 5% inflation rate for the U.S.

When compared with the consumer price index for the Twin Cities, which cooled off to 3.4% last month, wage growth has now edged higher than inflation.

Most racial groups saw unemployment rates improve las month. The Black unemployment rate in Minnesota dropped to 2.5%, down from 3.4% in February.

The Latino jobless rate declined to 4.3% while the white unemployment rate stayed the same at 2.4%. The figures for racial groups are based on 12-month moving averages because of the smaller sample sizes.

The state's labor force participation remained steady at 68%.

about the writer

Kavita Kumar

Community Engagement Director

Kavita Kumar is the community engagement director for the Opinion section of the Star Tribune. She was previously a reporter on the business desk.

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