Employment picture not as rosy as numbers suggest

Although Minnesota's unemployment rate fell to 7.3 percent in September, employers continue to shed jobs, and thousands of Minnesotans have left the labor market, state officials announced Thursday.

The unemployment rate dropped from 8 percent the previous month. The new rate was 2.5 percentage points lower than the national rate, the first time since 1992 that the disparity has been that wide.

Despite the improved jobless rate, employers shed 7,900 jobs in September. About 4,000 people left the labor force, and officials say it may be due to an increase in the number of people enrolled in colleges and universities.

State economist Tom Stinson said the unemployment rate and the job loss numbers, taken together, present a complicated picture of the state's economic outlook.

"This is a pretty big divergence here, and we have to be concerned about which one is actually reflecting what's going on, and which one is actually a monthly aberration," Stinson said. "The economic outlook now appears at least better in the short term than the outlook for the weekend weather, which hasn't been the case for a couple years."

While the declining unemployment rate is an encouraging sign, it also means thousands of the state's unemployed will be eligible for fewer weeks of benefits.

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McElroy said the U.S. Department of Labor is expected to certify the new numbers next week, which would reduce the maximum number of weeks of unemployment benefits from 79 to 72 weeks. Up to an estimated 7,000 people could be affected by the change, 4,200 of them starting Nov. 14.

"There will be some unemployment beneficiaries that will lose benefits that they had anticipated," McElroy said. "We're hoping many people will get jobs between now and the time they would have run out of benefits."

Officials said the largest job losses occurred in government, particularly in education. McElroy said a combination of tight budgets and declining enrollments meant fewer teachers started work in September.

Government job losses were at 5,600, while employment in leisure and hospitality was down 4,900. Health care, professional and business services, other services and construction also experienced declines.

Five of the state's 11 industry sectors reported employment gains, including manufacturing, trade and transportation, information, mining and logging, and financial activities. Trade and transportation, which also includes utilities, added 2,600 jobs in September.

The Rev. Rod Anderson facilitates a job transition group at St. Andrew Lutheran Church in Eden Prairie. He says the group's job procurement rate has not increased.

"We just had one new job yesterday and there were maybe 120 people there. So the ratio is not very good, and it's not been improving," Anderson said.

McElroy said while the unemployment numbers do reflect a real improvement, there are plenty of other indicators that show the recession continues.

"Things appear to be getting a little better, but we're careful not to be overly optimistic," he said.