Minnesota's unemployment rate fell last month to 3.3 percent, a level last seen in October 2000 and a sharp break from its range over the last three years, the state jobs agency said Thursday.
But that drop in the unemployment rate contrasted with other data that showed the state's job growth was slower over the last few months than it was earlier this year.
Minnesota's nonfarm employers cut 4,500 jobs last month, the Minnesota Department of Employment and Economic Development said. And the state is no longer ahead of the national rate of job growth, as it was for much of the year.
All the state agency's figures are adjusted for seasonal changes. And one reason for the appearance of conflicting data is that the formula applied to create seasonally adjusted data, which is based on patterns that emerge over several years, doesn't always conform to the hiring and firing in a particular month.
The assumptions behind that formula are tested the most in the spring and fall, when weather affects the beginning and end of construction season and the large number of builders who work outdoors, said Steve Hine, director of labor market information at DEED.
"It's a very fickle exercise to seasonally adjust the data at the turn of the season," Hine said. "It just depends on when the snow flies, when the construction jobs end."
Even so, the plunge in the unemployment rate of 0.4 percentage points from 3.7 percent in September represents an alignment with hiring figures collected in a different survey. Since July 2014, Minnesota's unemployment rate hovered in a range of 3.7 percent to 4 percent while the state added jobs in that time at a fairly strong rate of more than 40,000 a year.
The October drop also was reflected in the unemployment rate that is not seasonally adjusted. Unadjusted, it fell to 2.4 percent in October from 2.9 percent in September, Hine said.
He said economists will learn over the next two months or so whether the October drop represents a sustained break from the range that the unemployment rate has been in for so long.
November and December tend to see the rate go down as people are hired into seasonal retail jobs, while January sees an increase in the rate as those jobs end. The seasonal adjustment formula levels out that effect somewhat but swings still occur.
Over the 12 months that ended Oct. 31, the state added about 41,372 jobs, growth of 1.4 percent. That's the same growth rate as the nation as a whole. Minnesota for much of the year outpaced the nation in job growth. As recently as August, the state's 12-month job growth rate was 1.7 percent.
"It is a little bit more concerning that over the past six months we've really seen job growth slow down," Hine said. "It had really spiked. We saw some of the strongest post-recessionary job growth [in early 2017].
It does start to make us wonder whether there is, not necessarily a slowdown, but more of a binding constraint."
The state experienced its lowest unemployment rate in early 1999, when it was 2.5 percent for several months.
By October 2000, the last time it was 3.3 percent, Minnesota was seeing a slow upward climb in the rate that would accelerate the next year when the U.S. experienced a recession. In the latest survey of Minnesota's jobs scene, DEED found fewer of the 11 sectors by which it divides the economy adding jobs.
And the sector that has been the state's champion performer for more than a year, education and health services, actually wiped out jobs last month — 2,400.
The only sectors that added jobs in October were leisure and hospitality, manufacturing, government and information.
Evan Ramstad • 612-673-4241
