State jobs gain in July was first in 12 months

Minnesota celebrated its first monthly employment gain in a year by adding 10,300 jobs in July, enough to tamp down the unemployment rate by 0.3 percent to 8.1 percent.

The results, reported Thursday by the Minnesota Department of Employment and Economic Development, bolstered spirits but also drew cautionary remarks as state officials insisted they either did not know, or doubted if the good news would last.

The U.S. unemployment rate in July was 9.4 percent, down from 9.5 percent a month earlier. Minnesota continued to beat the national figures and showed a marked improvement from its 8.4 percent unemployment rate for June, when 16,700 people lost jobs in the state.

The July drop "is encouraging news, particularly because the job gains were widespread across industry sectors," said DEED Commissioner Dan McElroy. "We are hopeful that this is the beginning of an upward trend for our economy." But he added that he is cautiously optimistic.

State economist Tom Stinson called the results good news, but cautioned that "we still have a long ways to go. Most analysts think most unemployment numbers will go up noticeably for the next nine months, and there is no reason to think that Minnesota will [buck] that tide," Stinson said. "Most people think the [U.S.] unemployment will peak around 10 percent sometime in the spring ."

Minnesota lost thousands of jobs over the last three months, Stinson noted. While July showed a net jobs gain, the state still lost 1,300 jobs in the trade, transportation and utilities sectors, 500 information jobs and 200 service jobs.

Still, eight of the state's 11 industry sectors gained employment during the month. Leisure and hospitality added 3,900 jobs, while city and local governments gained 2,800. The badly hurt manufacturing sector added 1,700 jobs, giving officials some hope that this "extremely important" sector might begin to recover. Professional and business services firms added 1,700 jobs in July, education and health services added 1,200, construction added 700, logging and mining added 200 and financial activities added 100.

Minnesota's good fortune contrasted with disturbing national news Thursday as the U.S. Department of Labor reported that initial claims for unemployment insurance jumped 15,000 to 576,00 claims for the week ending Aug. 15. The four-week moving average jumped by 4,250 initial jobless claims to 570,000. Such figures gave several economists pause as they noted that the economic recovery will not be quick.

Overall, there were 2.657 million jobs in Minnesota in July, up from 2.647 million a month earlier, but down 3.7 percent from a year ago. Year over year, Twin Cities metro-area jobs fell by 3.5 percent. Duluth dropped 4.4 percent and St. Cloud dropped 2.7 percent.

McElroy's overall enthusiasm is buoyed by the small addition of manufacturing jobs but tempered by the fact that there has not been any noticeable rise in temporary staffing jobs, often a first sign of economic recovery.

He noted that woodworkers in the cabinet, door and window fields were beginning to report "some strength." That is particularly encouraging, considering that Minnesota's homebuilding trades were decimated by the recession, laying off thousands of workers over the last three years.

McElroy noted that makers of oriented strand board, an engineered plywood that is made of chip board, have yet to report any improvement, however. As a result, it's too soon to declare that the housing sector has staged a recovery.

Job vacancies decrease

In a separate report Thursday, DEED released the results of its second-quarter job vacancy survey. There were 31,400 job vacancies in the state between April and June, a 39.4 percent drop from a year ago. The survey also showed that there were 7.7 unemployed people for each job vacancy in the state. The good news was that 95 percent of the Minnesota employers surveyed said they expect to maintain or increase their employment levels through the end of the year.

On the national front, economic research firm IHS Global Insight predicted that the nation's GDP should begin to grow in October and continue growing slightly through the rest of the year. Researchers cited stock market improvements, a rise in building permits and in work hours as signs that the recession may begin to turn around during the second half of this year.

McElroy and other DEED officials discussed the state numbers Thursday morning from a state workforce center in Brooklyn Park. Unemployed people lined up at the center before the doors even opened, McElroy said. He said the state does not have a clear picture of how many discouraged workers may have given up looking for jobs. And it is not known how many people are working two and three part-time jobs because they cannot find full-time work.

DEED officials said it is not yet clear how President Obama's stimulus package may be factoring into overall job increases in the state.

Robert Kill, CEO of the quasi governmental business assistance group Enterprise Minnesota, called the latest unemployment numbers a positive sign overall for the manufacturing sector. "Over the past several weeks, we've heard from companies that are gradually receiving more orders and adding jobs at a conservative rate," Kill said. "The general feeling is that small and medium sized manufacturers are cautiously optimistic right now."