January jobless rate rises to 7.6 percent

For many years, Minnesota's jobless rate handily outperformed the national average. But that hasn't been true during this recession, which started in December 2007, or for the period leading up to it.

But recently, the state's unemployment number has been hovering just below the national number.

The January job numbers erased Minnesota's advantage altogether, according to state labor market analyst Steve Hine.

This is a really disappointing report. It's just not possible to put a good spin on it.

"Recent history of the past couple years has certainly shown us that those decades of being below the national rate by 1.5 to 2.5 points is behind us. We're currently right at the national rate," Hine said.

Dan McElroy, Commissioner of the Minnesota Department of Employment and Economic Development, attributes Minnesota's rising unemployment rate to the state's connection to the national and world economies, which have been hit hard by the housing downturn and credit crunch, among other things.

The downturn has been especially rough on the manufacturing, professional and business services, and construction sectors in Minnesota. McElroy said those are the industries with the biggest year-over-year job losses in the state between January 2008 and January of this year.

"This is the twentieth consecutive month that construction has been down, and that pushes out in things like wood products manufacturing, and kitchen cabinets and other things being down," McElroy said.

Construction employment in Minnesota fell by 18.5 percent in January compared to the year before. That's a much steeper drop than the national one of 10.5 percent during the same period.

But some sectors did add jobs in Minnesota last month. The Financial Activities sector, as well as Trade, Transportation and Utilities, which includes retail trade, ticked up slightly. So did the usually reliable Education and Health Care Services industry.

McElroy described the job market in Minnesota as intensely competitive. A job vacancy survey released by DEED bears that out. The survey polled a wide number of employers in the last three months of last year.

"The top line news is that the number of vacancies is down about 38 percent from a little over 51,000 to 31,000, and this is a survey of a large number of employers," McElroy said.

The results indicate that for every ten open jobs, there are almost 60 people looking for work.

McElroy said the percentage of surveyed employers who expect job cuts in the next six months tripled to 10.5 percent.

This kind of news leaves people like Melissa Hill feeling a bit stunned. She's in her early 30s and lives in Minneapolis. Hill got laid off from her job as a data management specialist a few weeks ago.

"It is a feeling of shock," she said. "I think for the first few weeks you don't quite I think for the first couple weeks understand your situation yet, things just seem kind of normal."

Hill said she's not panicked about her job prospects and may consider a career shift. But she is marveling at how hard it is to find even temp work right now, which, in the past, she could always snag pretty easily.

Another Minneapolis resident, Rachel Nilsson, knows what that's like. Nilsson was laid off in December. Her job involved making software easier to use.

She started her job hunt before she even got laid off and found it a tough market. But, she did land a position doing similar work and she offers some counsel to laid off workers.

"I think there are people out there hiring," Nilsson said. "There's just a lot of competition and you need to marshal your resources for the places where you'd be a good fit."

But State economist Tom Stinson sees little more than gloom. He said the federal stimulus package, which will give consumers small tax breaks, will hopefully ramp up demand for goods and services all the more, and get people spending.

That would give employers more reason to at least hang onto jobs, but not necessarily ramp up hiring. That's as cheery as he'll get, especially in light of today's job numbers report.

"This is a really disappointing report. It's just not possible to put a good spin on it," he said.

Stinson said the unemployment rate likely has a ways to climb. Global Insight, the economic forecasting company the state uses is projecting a national unemployment rate of 9.4 percent through most of 2010.

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