Minnesota lost 600 jobs in June, another sign of a bumpy recovery

Minnesota's job recovery appeared to stall in June with the state losing 600 jobs at a time when many businesses are still eagerly looking to hire workers.

The state's employers have brought back nearly 60% of the jobs lost when the coronavirus outbreak threw the economy into recession in spring 2020. The pace of recovery slowed this spring, but the loss of jobs last month — the first decline since December — was a surprise.

"It's lumpy and it's confusing," said Jeanne Boeh, an economics professor at Augsburg University in Minneapolis.

She added that one month doesn't make a trend and it will likely be several months until economists have a better handle on what's going on in the labor market.

Two changes in September could be impactful. Enhanced unemployment benefits expire that month and schools will reopen, which will reduce child-care pressures that may be preventing some people from taking a job.

Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development (DEED), said the latest data shows "you don't just sail out of a global health pandemic."

In a discussion with reporters, Grove added, "It's going to be a little choppy and it's not going to be a straight line between what's here and what's next."

At the same time, Grove and other DEED officials said the official June jobs number didn't tell the whole story. On a net basis, Minnesota added 36,000 jobs last month, they said. But because of seasonal adjustments, which may be being thrown off by atypical hiring trends during the pandemic, that number was knocked down to a loss of 600 jobs.

"June is usually a boom month in our state and so compared to that past trajectory, the seasonally adjusted number brings the jobs numbers down," he said.

Grove added that given Minnesota's climate and its four seasons, its job market sees more volatility from season to season. So the seasonal adjustments often have a bigger impact.

In June, the state's unemployment rate also held steady at 4%. The U.S. unemployment rate rose one-tenth of a percent to 5.9% last month.

The state has regained about 246,000 of the 416,000 jobs it lost in February through April 2020. So it is still 170,000 jobs short of the pre-pandemic job base, which was about 3 million.

On a seasonally adjusted basis, Minnesota's June jobs report puts the state at odds with the U.S. as a whole, which added a higher-than-expected 850,000 jobs in June, an increase from prior months.

But Grove noted that Minnesota's job growth has outpaced the U.S. so far this year at 6.4% compared with 5.8%. The state also lost more jobs than the rest of the U.S. during the first months of the pandemic.

"We are seeing some slowing in growth, but that is to be expected because all of that job increase is predictably really front-loaded in terms of coming out of this recession," said Oriane Casale, director of DEED's labor market information office.

The state added 51,600 jobs in January, 12,400 jobs in February, 20,400 jobs in March, 13,400 jobs in April and a recently downwardly revised 9,000 jobs in May.

Job losses in the state last month were steepest in education and health services, which was down 2,500 jobs. That was followed by financial services, which lost 2,200 jobs, construction, which declined by 2,100 jobs, and leisure and hospitality, which decreased by 500 jobs.

That was partly offset by 2,700 jobs added in trade, transportation and utilities, 2,500 jobs added in government, and 1,200 jobs added in professional and business services.

While the jobs in leisure and hospitality were at a small deficit last month, state officials noted that hotels and restaurants actually gained a net of 14,300 jobs last month before the seasonal adjustment.

"Because we saw such dramatic job increases in January, February and May, and also in May and June of 2020, it's really throwing off the seasonal adjustment factors," Casale said.

Given the conversations about the difficulties restaurants have been having in hiring workers, Grove said the data shouldn't be interpreted as the state having made no job gains in those industries.

"We did see a lot of hiring in restaurants," Grove said. "We are seeing people go into those jobs. Certainly not at the rate that is needed, but it is happening."