Minnesota lost 3,100 jobs in August while jobless rate remains near historic low

Minnesota's big hiring spurt in July came to a screeching halt in August in what turned into a summer of whiplash when it came to job creation.

June started off slow with the addition of just 1,000 jobs. Growth took off like a rocket in July when 17,100 jobs were added. And then it crashed in August, data released Thursday showed, with a loss of 3,100 jobs.

State officials described the new data as a "pause" in the job market, reluctant to declare a turn even as policymakers at the Federal Reserve try to slow the economy and hiring with higher interest rates.

Unemployment insurance claims haven't increased in the state, officials said. And the unemployment rate, which plunged to the lowest ever recorded in U.S. history earlier this summer, rose just one-tenth of a point to 1.9% in August.

"People could just be quitting, taking unpaid leave," said Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development.

"They could be going back to school. They can be retiring," he added. "We also know August is generally a less predictable month in Minnesota when a lot of the firms in our state are ramping down from summer hiring."

Grove added that he hasn't heard any employers around the state saying they're slowing down hiring.

"We are seeing just a huge appetite for workers, particularly in manufacturing," he said.

The month-to-month job numbers have sometimes been uneven coming out off the pandemic recession. Over the course of this year, Minnesota's job growth has been more or less on par with the rest of the nation.

However, the state is trailing the U.S. in job recovery since the beginning of the pandemic as the size of its labor force has dropped by more than 80,000 workers. Minnesota has regained about 84% of jobs lost in the pandemic while the U.S. recouped all its jobs by earlier this summer.

Minnesota's unemployment rate, which in recent months has been the lowest in the nation, is also still about half that of the U.S. jobless rate of 3.7%.

The latest figures also show some improvement for Black Minnesotans, with the jobless rate for that group declining to 6.6% in August from 7.3% the month before. But it's still nearly triple the white unemployment rate.

Job losses last month were led by manufacturing with 3,200 jobs; trade, transportation and utilities with 2,300 jobs; and construction with 1,900 jobs.

That was partially offset by an addition of 2,800 jobs in government and 1,900 job in education and health services.

The number of jobs added in July was also revised down a couple of thousand.

The state has been grappling with one of the tightest labor markets in the country, with job postings outnumbering unemployed workers by nearly 4 to 1.

That has been helping to boost pay. Hourly wages in Minnesota rose 5.8% over the year compared to 4.4% for the U.S. That is a reversal from earlier in the year when the state was lagging the nation in terms of wage growth.

But neither is keeping up with inflation, which rose by 8.3% in August.

However some sectors in Minnesota that are working especially hard to find workers such as nursing and residential care, and construction and professional and business services have seen wage increases that have surpassed inflation in the last year, state officials said.