Chilling job market warms gubernatorial campaign

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Officials with the state Department of Employment and Economic Development say losing 12,700 jobs in a month is cause for concern. It's only happened two other times since the state began keeping records. The only other times a monthly job loss surpassed 13,000 was in the middle of a recession, back in 2001 and in 1982. DEED Acting Commissioner Ward Einess said during a conference call with reporters that a one-month snapshot may not indicate a larger trend, especially given what's happened over the last year.

"You can't latch on to any one month, and you look over the long haul, the last 12 months, we still have 57,000 jobs created, I think every industry sector is up over the year, we're outperforming the nation still in our growth rate," he said

Over the past year, Minnesota's job growth was 2.1 percent, compared to the national rate of 1.3 percent. The state's top labor market analyst, Steve Hine, says the U.S. economy has weakened considerably, and that affects Minnesota.

"A lot of the same factors that would contribute to the national situation are going to play out in the state too; things like high energy prices and high interest rates, and I guess maybe quite recently, a little bit more heightened anxiety on the geo-political front."

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Hine says the state typically sees a seasonal decline in jobs in September. The government sector had the greatest loss of 5,500 jobs, two-thirds of those in education. Other sectors that lost jobs include education and health services, manufacturing and transportation. The numbers are preliminary, based on surveys of employers, and will be adjusted next month. State officials say they could be revised downward, but that won't erase an estimated job loss of nearly 13,000.

The new numbers could add fuel to the race for governor, since Republican Gov. Tim Pawlenty touted this summer's job gains in his re-election campaign. His DFL opponent, attorney general Mike Hatch, says the numbers raise concerns about the state of Minnesota's economy.

"Hopefully it's a blip, although August we lost jobs as well," according to Hatch. "The concern has got to be when you get a real hit like this that it doesn't continue. We do know for instance, we had some plant closings up north with Ainsworth in Bemidji, Grand Rapids and Cook - that was about 500 jobs, there's probably about 500 logging jobs that are affected, there's trucking jobs."

Both Hatch and the Independence Party's Peter Hutchinson say the governor shouldn't take the blame when job numbers plunge, or the credit when jobs are booming. Hutchinson says the problem for Pawlenty is that the governor already held two news conferences to tout the good job numbers.

"This is a credibility thing. He's been going around banging the drum on this thing he can't control, and now the thing he can't control has come around to bite him in the butt and he's just going to have to live with it," Hutchinson said.

A statement from Pawlenty's campaign tried to emphasize the positive aspects of the latest job numbers. Spokesman Brian McClung notes that Minnesota continues to have one of the lowest unemployment rates in the nation, and posted job gains in 13 of the last 15 months.

DEED Commissioner Ward Einess also pointed out that construction jobs remained steady, and several sectors saw job growth, including professional and business services. The state's labor force also grew by 11,300 people, the largest gain so far this year. That suggests Minnesotans feel more optimistic about the job market. But it also contributed to a slight increase in Minnesota's unemployment rate, which was 3.8 percent.