Every month the GREATER MSP intel team tracks monthly jobs numbers reported by the Bureau of Labor Statistics and Minnesota Department of Employment and Economic Development. We then report out regional findings in the monthly MSP Economic Pulse. The August numbers show that while we are still seeing need for much recovery, there are some positive signals to share out. Overall, we saw continued improvement from July to August in unemployment (survey of households) and employment (survey of businesses). In this week’s post we share with you five positive signals in the MSP August jobs report.
1. Unemployment rate continues to fall
The unemployment rate dropped to its lowest level since March, falling further from 8.2% in July to 7.9% in August. The number of people who are unemployed and actively seeking work in the region dropped by nearly 6,000 from 166,109 to 160,134 in August. This is good news. The peak of unemployment this summer was the month of May when the unemployment rate spiked to 10.1% and the total number of unemployed was over 200,000. With three consecutive months of falling unemployment, August’s rate is a signal that we are headed in the right direction and workers are getting back to work. We know there is still a long way to go. The unemployment rate is 5 percentage points higher than the rate in August 2019 (2.9%) and there are still about 100,000 people who are unemployed and actively seeking work in the region.
Source: MN DEED Local Area Unemployment Statistics
2. Promising uptick in employment growth rate after slowdown in July
The pace of employment recovery has been uneven through the COVID-19 pandemic. After solid rates of growth in May and June, we saw a big drop in the rate of employment growth from June to July. This caused concern that after the immediate rehiring taking place after loosening restrictions on stay at home orders and reopening of many retail and food operations, the employment returns had stagnated. A continued stagnation of employment growth signaled that many of the jobs that were lost during the pandemic may not return. While we still have a lot of reasons to be concerned about the return of jobs, the rate of growth in employment rose back up to 1.4% from July to August. It may be a small uptick, but this increased pace of jobs returns gives us hope that the pace of recovery is holding steady. While we recognize that there could be other factors at play with the uptick from July to August (such as seasonality), we consider this increase in pace a positive signal for the MSP regional recovery. Nevertheless, total employment is still 7.4% below August 2019 levels and we have another 150,000 jobs to add back to get to August 2019 levels.
Source: MN DEED Current Employment Statistics, 2020
3. Residential construction employment consistently grows through pandemic
Employment growth in August was disproportionate across industry sectors, but one industry that has consistently seen job growth throughout the COVID-19 pandemic is Residential Building Construction. Total employment in the sector grew to 10,614 in August, up 1% from the previous month and 10.9% from employment year-over-year, the strongest over-year job growth across industries. Employment growth in the industry sector is being fueled by increased demand for housing in the region, evident in the rising level of residential construction permits. The total number of residential building permits issued from April to August 2020 was 8,823 according to surveying by the U.S. Census Bureau and over half of those permits were issued for structures with 5 units or more. Year to date there are over 13,000 new permits issued. The healthy market for new housing and associated uptick in employment in construction is a positive signal in region. During this challenging economic downturn and recovery, the stability and consistency of employment opportunities in this sector is encouraging.
Source: US Census Bureau
4. Manufacturing growth
There was concern that manufacturing employment would take a big hit through the crisis, especially after some notable layoff notices in the market such as the June layoff notices published for Honeywell Aerospace (212) and Seagate Technology (140), found here. From February to July 2020 employment in manufacturing dropped by over 9,000 (4.6%). In August we saw a promising increase in manufacturing employment, adding back nearly 3,000 jobs from July. At 1.5% over-the-month, this is the highest growth we’ve seen so far in the manufacturing sector in 2020. Employment growth in manufacturing has occurred primary in the production of non-durable goods, with the largest growth in food manufacturing. The number of people employed in food manufacturing in August 2020 reached 15,687, a 6.3% increase from July and 0.5% increase from August of last year. Total employment in food manufacturing is higher than it has been since 2002 in the MSP region. This is a great signal for an important sector in our regional economy.
Source: MN DEED Current Employment Statistics
5. Labor Force remains high
Another sign of worry in July was that the total labor force, the number of workers who are employed or actively seeking work, dropped significantly from June. The total labor force shrunk by 16,821 in a one-month period. Despite the falling number of unemployed in the same period, a shrinking labor force is worrisome. It caused us to hypothesize that many workers who were laid off during the COVID-19 pandemic were discouraged in their hunt for new job opportunities and leaving the labor force. We also saw this as a signal that many workers were being forced to leave the labor force to care for children or other family members. We felt a great sense of relief when the August survey of households showed growth in the labor force. From July to August the total labor force increased by over 9,000 and the number of employed within the workforce grew by 15,000. This is a positive signal that unemployed workers are sticking it out and finding their way back into employment, though we are still tracking closely to better understand the impact of increasing demands of childcare on labor participation, especially for working mothers.