After brief slowdown, Minnesota's job market ramps up in April

After a slowdown in March, Minnesota employers ramped hiring back up in April as more workers entered the labor force.

The state added 4,500 jobs last month while its unemployment rate held steady at 2.8%. It remains even lower than the also-low U.S. jobless rate of 3.4%.

The Minnesota Department of Employment and Economic Development (DEED) released the latest jobs numbers Friday, providing a snapshot of a still-strong labor market chugging along despite the headwind of higher interest rates.

Minnesota continues to grapple with a tight labor market as it has about 41,000 fewer workers compared to before the pandemic. So state officials celebrated the fact that 3,600 people entered the labor force last month, leading to a small uptick in the state's labor force participation rate to 68.1%.

"Everyone in the labor force does make a difference, and it's really great news during this tight labor market," interim DEED Commissioner Kevin McKinnon said.

Angelina Nguyen, DEED's labor market information director, noted the state's aging population and accelerated retirements in 2020 and 2021 are big reasons for the dips in the size of the labor force in recent years.

Even so, she added Minnesota's labor force participation rate remains higher than the U.S. rate of 62.6%.

Still, the state's tight labor market has also meant that Minnesota experienced slower job growth — 1.5% — compared to the nation as a whole — 2.6% — in the past year.

While the U.S. fully recovered all jobs lost in the pandemic last summer, Minnesota still has a little ways to go to reach that milestone. The state has gained back about 97% the of jobs lost in the pandemic.

In February, the state briefly recovered all private sector jobs until it lost 6,900 jobs in March, a number revised down by 1,200 jobs.

Despite that one-month setback, Nguyen said, "Minnesota's job growth is steadily climbing toward pre-pandemic levels."

Trade, transportation and utilities led the way in job gains last month with the addition of 2,800 jobs.

Leisure and hospitality followed with 1,900 jobs, then education and health services with 1,300 jobs, construction with 700 jobs, information with 200 jobs and government with 100 jobs.

Meanwhile, a handful of sectors saw job losses, including professional and business services with 1,100 jobs as well as manufacturing and financial activities, which each lost 700 jobs.

While job cuts have been in the news lately with announcements from companies such as 3M, Medtronic and Best Buy, McKinnon reiterated the volume of layoff notices and claims for unemployment insurance in the state remain at typical levels, similar to what Minnesota experienced in the pre-pandemic years of 2018 and 2019.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said earlier this week the regional economy is still pretty strong and growing "at a pretty robust clip."

"The labor market is not as frothy as it was nine months ago," he said at a transportation conference in St. Paul. "It's not that hot, but it's still a very strong labor market overall."

It remains so despite the Fed raising interest rates by 5 percentage points in the past year or so in the hopes of bringing inflation down through cooling off the economy.

Nonetheless, inflation is still too high, he said.

"We have not seen much softening in the labor market," Kashkari said. "So that tells me that we still have a long way to go before we get inflation back down to our 2 percent [target]. And we at the Federal Reserve probably have more work to do on our end to try to bring inflation back down."