Minnesota’s job market loses momentum, as surveys show worry about the economy

Seasonal retail and health care hires did not offset the loss of jobs in the professional services and construction sectors in October, resulting in a net loss of 1,000 jobs in Minnesota.

And while a state report released Thursday found the manufacturing sector added 1,100 jobs in October, a new survey by Enterprise Minnesota found that factories are slowing hiring for the rest of the year.

“We know that more manufacturers aren’t hiring. They’re either full or just turning away open positions because demand is either flat or a little bit down. So the number of manufacturers in our survey that have open positions has dropped quite a bit,” said Robert Lodge, spokesman for the Enterprise Minnesota entity that assists small and medium-sized manufacturers.

The survey of factory heads found they were concerned about the economy and had low confidence levels as they grapple with inflation, rising health care costs and new state regulations. Specifically, 68% expected to be affected by a new payroll tax required to fund the paid family and medical leave program that goes into effect in January 2026.

“The survey this year reveals that manufacturing executives believe that Minnesota’s business climate is worse than any time in the 16-year history of the survey,” said Bob Kill, president and CEO of Enterprise Minnesota.

Ernie Goss, director of Creighton University’s Economic Forecasting Group, said he found similar trends across most central states in his monthly survey. In Minnesota, employment trends remained “below neutral” in October.

So far this year, Minnesota factories lost 4,020 jobs.

In October alone, the Minnesota Department of Employment and Economic Development said Thursday that the month’s lost jobs were not enough to move the state’s unemployment rate, which stayed at 3.4%.

But the report was a kick to the psyche of labor boosters who hoped for job growth.

On the plus side, state officials upwardly revised September’s report, noting employers actually added another 1,100 jobs that month on top of the previously reported 6,300.

So far this year, Minnesota gained 33,257 payroll jobs, an increase of 1.1%.

Five key industries have fueled the growth, led by the education and health services and health care and social assistance sectors.

Minnesota’s growth rate to date lags behind the national increase of 1.5%.

In October, the state lost jobs in areas such as professional and business services and construction.

In addition to October’s overall job slippage, hourly wages dipped slightly to $37.76 during the month. However, over-the-year average earnings grew $1.21 an hour, or 3.3%. That outpaced inflation and matched the national wage growth rate.

“In general, Minnesota’s labor market held steady in recent months and we saw bigger variations in regional job change,” said Angelina Nguyễn, labor market information director for DEED.

DEED Commissioner Matt Varilek said the state’s employment prospects looked brighter moving forward, though.

“Last month, we announced two major business expansions — Sofidel and Solventum — that will retain and add thousands of jobs in the state,” he said in a statement. “On top of those expansions, we also announced the latest round of broadband development funding, which enables more businesses across greater Minnesota to grow and attract talent. “

But as the Enterprise Minnesota and Creighton surveys showed, global economic factors will continue to affect employment.

“In terms of impending economic threats, supply managers named supply chain disruptions as the top potential risk to their firm’s business operations in the months ahead,” said Creighton’s Goss.

About 41% expect business conditions to worsen over the next six months, Goss said.