Minn. loses more than 22K jobs in Dec., though jobless rate falls to 7 pct.

The state's employers cut 22,400 jobs in December, marking the biggest employment decline in Minnesota since at least 1990, according to the Minnesota Department of Employment and Economic Development. All but one industry lost jobs last month.

Minnesota's unemployment rate ticked down slightly to 7 percent. The payroll employment and unemployment numbers are based on two different surveys, and occasionally, such as in December, they appear to contradict each other.

State officials said the decline in the unemployment rate last month is especially unusual, given the extent of the job losses.

Minnesota's head labor market analyst, Steve Hine, said he had expected the state's job growth rate, which had been beating the national average, to slow down, but not so abruptly.

"It's not a surprise that we did see some of that convergence, but it came as a surprise to see this kind of magnitude in the changes," Hine said.

Hine said he hopes the huge job loss in December is statistical and will be revised in coming months. He attributed some of the steep losses to temporary factors. Government lost 5,300 jobs, which Hine said had to do with the loss of 4,000 temporary election judges.

"The balance of that decline in the government jobs is also perhaps a temporary phenomenon being driven by larger than usual declines in student jobs," he noted.

The decline in student employment at universities and colleges was about twice as big as normal, he said.

State economist Tom Stinson called the report "very disappointing." "When I heard it on the radio this morning, I thought the announcer had made a decimal point mistake," he said, given the magnitude of the job loss.

But Stinson cautioned that the numbers are short-term snapshots, and one shouldn't make assumptions about what the job losses mean for the coming months.

"We don't expect we'll be losing 20,000 jobs in the month of January, for example."

At the Federal Reserve Bank of Minneapolis, forecasting models do project job growth over the coming year.

"So we would expect to see data coming through the next two or three months with some increases," said Minneapolis Fed economist Rob Grunewald.

Though manufacturing lost jobs in December, economists cheered its performance year-over-year as one of the few positive surprises in last month's employment data.

"For the first time I can remember, I can report that manufacturing became the leading job gainer on an over-the-year job basis with December's release," Hine said.

Manufacturing has now surpassed education and health services as the biggest year-over-year job gainer. Manufacturing gained 10,700 jobs between December 2009 and last month, the sector's biggest year-over-year employment gain in 14 years.

"But there's more to the local economy than manufacturing employment. And we need to see growth in all the sectors to really have the economy going the way we want it to go," said Stinson.

While the Education and Health Services sector also experienced job growth compared to the year before, it was down 3,000 jobs in December from the previous month, with most losses occurring in health care and social assistance.

The trade, transportation, and utilities sector, which includes retail trade, also had significant losses in December, with employment declining by 4,200 jobs.

Hine said given the strong national sales figures that came out recently, it was disappointing that retail hiring in Minnesota wasn't stronger.

But he took comfort in the fact that some of declines in retail were unrelated to holiday spending.

"For example, auto dealers are down 5.9 percent," he said. "Building materials were off 3.1 percent, and gas stations dropped 3.5 percent. So some of that disappointment we saw in retail trade was not necessarily in areas like general merchandise and department stores."

Overall, Hine noted that December is a month during which the seasonal adjustment process is especially difficult and can lead to volatility in the numbers, and the past few Decembers have been far from "normal."

"I think I've said before that I hate May. I hate September," he said. "I really hate December."

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