Unemployment rate ticks up, but state adds 2,200 jobs

Minnesota employers added 2,200 jobs last month with help from companies hiring temporary workers, a sign that the state could be reaching a turning point in the recession, state economic officials said Thursday.

The state's unemployment rate rose slightly in October to a seasonally adjusted 7.6 percent compared to 7.4 percent in September, but officials had expected the rise and said it wasn't significant.

The state's jobless rate continued to be lower than the national average of 10.2 percent in October.

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See MPR's Job Pain Index, part of our coverage of Unemployment in Minnesota.

Dan McElroy, commissioner of the Minnesota Department of Employment and Economic Development says that's the biggest difference between the national and state jobless rates since the early 90's.

The state unemployment rate had declined three months in a row before October, but analysts said there's often an uptick in unemployment toward the end of a recession as more unemployed people who had given up on finding a job begin to again actively search for work.

Still, Steve Hine, state labor market analyst, says despite the uptick, an overall downward trend in the jobless rate still holds.

"I wouldn't look at this 0.2 [percent] increase as indicative of a reversal of a trend we've been seeing since June," said Hine. "We need to look at the overall trend. And the trend since June is that we saw a 1 percentage point decline in the unemployment rate, or 0.8 of a point, and that's again despite the fact that the U.S. rate has continued to trend upward."

The Minnesota Department of Employment and Economic Development said there was job growth in six industry sectors in October, led by professional and business services, which added 5,500 positions. The professional and business services sector includes a subset called "employment services," three-quarters of which is comprised by temp work.

DEED Commissioner Dan McElroy said officials are watching the temporary help industry closely, because it tends to shed jobs earlier than other sectors in a recession and starts hiring earlier in a recovery.

"We saw a good increase in that sector in October. The overall trend for temporary help is up," McElroy said.

Other job gains in October happened in education and health services, leisure and hospitality, government, information and financial activities. Logging and mining were flat for the month.

Job losses occurred in trade, transportation and utilities, manufacturing, construction and other services, DEED officials said.

DEED officials were at a Duluth workforce center on Thursday to discuss the new job numbers.

McElroy said it was unclear how many of the jobs added in October were related to stimulus funding.

Hine agreed that it's hard to track those numbers directly. But, he pointed to the following numbers as a clue to what's happening.

The state's last quarterly report indicated that the state had already spent at least $520 million of federal stimulus money on employment benefits, Hine noted.

That money, in turn, is spent out in the economy, allowing businesses to save or create jobs. Hine went on to point out that the Council of Economic Advisors estimates it takes $92,000 to create or save a job.

"So by that measure we're up to 60-70,000 jobs created or saved as a result of just the stimulus expenditures on (unemployment) benefits," he said.