Minnesota added 4,200 jobs in September; the unemployment rate climbs to 2%

Minnesota continued to show job growth last month, but not at the robust levels seen earlier this year.

The state added 4,200 jobs in September while the unemployment rate rose a tenth of a percentage point to 2%, the Minnesota Department of Jobs and Economic Development said Thursday.

August was also not as disastrous as initially announced; the figures for this month have been revised to a gain of 1,200 jobs instead of a loss of 3,100 jobs.

Still, job growth appears to be slowing from the spring, when the state added more than 10,000 jobs in each of three consecutive months, and July, when it added 17,100 jobs.

The moderation comes amid a still very tight labor market and as the Federal Reserve has aggressively raised interest rates in an attempt to contain inflation and cool the labor market.

DEED Commissioner Steve Grove noted that employment numbers may rebound month over month and hailed Minnesota’s 12th straight month of job growth. He added that he didn’t see much evidence of a slowdown in employers’ appetite to hire.

“When you have four jobs open for every person searching in the state, it’s hard to say there’s been a lot of downturn,” he said. “We speak every day with employers who continue to struggle to find workers.”

Minnesota had 192,000 job openings in August, down from 226,000 the previous month, according to the US Bureau of Labor Statistics. At the same time, state officials said unemployment numbers in Minnesota were at their lowest since the 1970s.

Amid the labor shortage, Grove said some companies, especially in manufacturing, are investing more in automation, realizing they won’t be able to hire 50 workers overnight. And many are retaining the workers they have, even if demand may slow in some sectors.

“If you have a worker in the current market, it’s really hard to consider letting them go,” he said.

The number of Minnesotans receiving unemployment insurance has remained relatively steady around low levels in 2018 and 2019, state officials said.

The size of the state’s labor pool has still not returned to pre-pandemic levels, fueled by an acceleration in retirements. In September, the state’s labor force fell a tenth of a point to 68.1%. It was the third month in a row that the metric declined.

State officials pointed to other signs of a tight labor market — the number of people working part-time who would prefer to work full-time fell last month and the percentage of 16- to 19-year-olds working rose at 53%.

Average hourly wages rose 5.7% year on year in September, more than the 5.2% in the United States. But neither is keeping up with high inflation, which rose 8.2% last month.

Minnesota has now recovered about 90% of the 417,600 jobs lost in the first months of the pandemic. Meanwhile, the United States has achieved a full employment recovery.

Job gains last month were led by education and health services with 3,200, professional and business services with 1,600, leisure and hospitality with 1,400 and manufacturing with 1,100.

This was partially offset by the loss of 4,300 jobs in government, 900 in financial activities and jobs in other services.

Nursing and residential care facilities saw the first month of job growth since the pandemic began. This is a small gain of 157 jobs, or 0.2%, but appears to be a sign that wage increases are helping to recruit more workers. Salaries in this sector increased by 11.7% over the year.

Other industries that saw significant wage increases over the year included professional and business services (up 9.5%), construction (up 8.5%), goods manufacturing non-durables (up 8.3%) and restaurants and bars (up 7.5%).

Minnesota’s black unemployment rate improved to 5.9% from 6.6% the previous month. The unemployment rate for whites also reached 2.2% while the unemployment rate for Latinos reached 3.7%. These figures are based on 12-month moving averages.

The state’s unemployment rate has risen over the past two months after setting a record low on record in US history.

But it is still near historic lows and among the lowest in the country. And that’s still a bit lower than the US unemployment rate of 3.5%.

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