Minnesota's job market gained momentum last month when the state's unemployment rate fell to its lowest point in three years. according to the state Department of Employment and Economic Development.
In December, Minnesota added nearly 8,000 jobs. But economists say that headwinds threaten to slow the state's recovery.
Several indicators point in the right direction, said state labor market analyst Steve Hine. For example, the number of online job postings for Minnesota grew in 2011 and initial claims for unemployment benefits continued to slide downward throughout the year. The jobless rate in December fell to 5.7 percent, the lowest level since the financial system crash in the fall of 2008. People who have jobs are getting more hours, Hine said.
"Hours worked per week, the average work week by private sector employees did tick back up a tenth of an hour, after a decline in November," Hine said. "That also is supportive of the growth in the demand for labor."
November numbers show a contradictory drop in both payroll employment and the jobless rate. Hine said those numbers were not subject to major revisions, suggesting they were not as suspect as first appeared.
In December the biggest employment gains came in the professional and business services sector, which added 3,200 jobs. Many of the positions in that industry are high-tech, high paying jobs.
Despite the long suffering construction industry netting only 200 jobs overall last year, Hine said, several subsets of the construction business showed more noticeable employment gains.
"The construction of buildings is up 11 percent over a year ago. Quite a considerable improvement over last year. And the residential building construction component of that is up 8.1 percent," Hine said.
Hine adds that what he calls the "all important" specialty trades sector also had a net gain in jobs last year for the first time since the housing market collapse began in 2006. Specialty trades include jobs involving plumbing, painting and electrical work.
"2011 was a better year than 2010," remodeling contractor Todd Bjerstedt said.
Bjerstedt, also president of the Builders Association of Minnesota, said he and other residential remodelers are seeing more business. However, the increase derives from good and bad economic news. On one hand, homeowners are remodeling more because they don't think they can sell their homes, Bjerstedt said. But also, more homeowners apparently are feeling confident enough to spend money.
"They are finding ways, somehow finding ways, whether it's savings or otherwise to do some projects," Bjerstedt. "Albeit, much smaller than they used to be."
Minnesota's slow, but persistent, rebound is reason to cheer, said V.V. Chari, a University of Minnesota economics professor. But there is also ample reason for caution. Chari said the Eurozone debt crisis and problems with other U.S. trading partners prevent a rapid recovery.
"Part of the slowness of the recovery is that this is very much a global recession and so lots of countries have been affected at the same time," Chari said.
As if to underscore the two-steps-forward, one-step-back nature of the recovery, St. Paul-based Ecolab Thursday announced it is cutting 500 jobs, or about 1 percent of its global workforce. The move comes as the cleaning products maker absorbs a major acquisition.
The combined companies employ about 2,500 people in Minnesota, but Ecolab officials say the number of layoffs in Minnesota remains to be decided. Ecolab said job cuts will hit mostly corporate staff and be spread across the globe. Ecolab's operations include locations in Europe, Latin America and Asia as well as North America. The company hopes to eliminate as many positions as possible through attrition.
Minnesota has a long way to go to recover the nearly 160,000 jobs lost in the recession. So far, about one in three of those jobs has returned.