"Minnesota jobs roar ahead"

H.J. Cummins and Jim Buchta, Star Tribune

Published May 19, 2004 JOBS0519 in the Star Tribune

April in Minnesota broke all kinds of jobs records, led by the state's largest ever monthly drop in unemployment, to 4.1 percent from 4.8 percent, officials reported Tuesday.

Economists used words such as "spectacular" and "breathless" to describe the job gains, which they said were part of a national turnaround. The U.S. economy added 625,000 jobs in March and April.

"The message is pretty simple -- this is really good news," state economist Tom Stinson said.

The biggest increase was the 5,100 new jobs in professional and business services. That includes a category called "management of companies" -- hiring in the headquarters of Minnesota companies, which skews toward upper-level jobs -- and "employment services" including temp agencies such as Certes Financial Pros, a St. Louis Park-based company that outsources high-end professionals to financial departments.

"We're seeing things turn around amazingly," said Karen Oman, Certes president.

She said that during the first quarter of the year she's increased her staff of 125 by nearly 10 percent, and revenue has risen 35 percent compared with the same time last year.

That's a sign, she said, that companies are finally in a hiring mode.

"We're guessing there have been needs for a while, but companies have been holding off on asking for help; they must be confident that things are turning around because they're willing to spend money to get caught up on their work," said Oman, who helps companies find controllers, chief financial officers and other high-level financial positions that typically pay between $60,000 and $150,000.

Oman said that during the past week she's received orders for 20 positions from small, medium and large companies, an indication that firms are in an expansion mode. "Financial needs grow as a company is getting back into producing," Oman said. "We're called a leading economic indicator, and we're telling people it's turning around."

All those new jobs raised the employment levels in Minnesota and the nation back to their November 2001 levels, said Steve Hine, labor research director at the state's Department of Employment and Economic Development, which issues the employment reports.

Tuesday's jobs news was particularly sweet for Minnesota, which showed no improvement in unemployment in March. April set several new seasonally adjusted records:

• The 0.7 percentage point drop in the unemployment rate was the biggest since the state started keeping records in the late 1970s.

• The 18,000 decline in the number of unemployed people, also going back to the 1970s. That was 13 percent fewer than March's 140,000 unemployed.

• The 4,500 new manufacturing jobs, the biggest monthly increase since the state started to track the statistic in 1992.

Complementing Tuesday's figures, which suggest more hiring, is another Minnesota statistic that suggests fewer firings -- new unemployment claims dropped 14.1 percent from March to April.

Manufacturing rebounds

The manufacturing sector, long a drag on the state's economy, tossed in the second highest number of new jobs -- 4,500.

"Last year we had to scramble for business; now the business is beginning to find us again," said Larry Hansen, principal engineer with Engineered Aeroacoustics in Crystal, a company that makes silencing equipment for power generator users all around the world.

Hansen said that last fall the company was struggling to keep its small staff of less than a dozen busy, but last month the company hired two metal fabricators and is on the lookout for two more.

"The last time we did major hiring was eight years ago and it was extremely difficult to get sheet metal workers at that time, and in some cases it was a bidding process," Hansen said. "Now there are a number of very experienced people available, and most were saying their jobs were eliminated or their company moved."

On the negative side of the ledger were 2,300 jobs lost in the trade, transportation and utilities sector, and 1,000 lost in financial activities including banking, insurance, real estate and securities brokerages.

The mortgage industry, for example, has been shrinking as the refinance boom evaporates.

When work does come their way, mortgage companies now turn to temporary workers. That's good for business at Sue Morrisette's Mortgage Temps Inc. in Edina. "They're saying, 'let's hire temporary employees until we can see further what's going to happen,' " she said.

Under the good-news-bad-news heading, Hine said Minnesota has now regained the 17,700 jobs it lost during the "economic recovery" -- November 2001 to March 2003. But the state still is down the 33,100 jobs lost in the recession, March 2001 to November 2001. Similarly, the nation has recovered the 1.06 million jobs lost during the recovery, but hasn't recovered the 1.62 million jobs that disappeared during the recession.

Also, the state still is down 50,000 manufacturing jobs since the industry peak in June 1998. Many of those might never come back, said James Peppe, regional manager of the National Association of Manufacturers in St. Paul.

"In every recession companies adapt and become more efficient. They find ways to do more with less, and sometimes in the midst of that we feel squeezed by having to do more with less," Peppe said. "We don't think we'll ever get back all the jobs we lost in the manufacturing sector."

Art Rolnick, senior vice president at the Minneapolis Federal Reserve Bank, agrees.

"We're seeing some growth in manufacturing, but I suspect that is not sustainable," he said. "The long-term trend is probably fewer jobs over time."

Hine also sees potential problems ahead.

"Some very strong trade figures have been supporting manufacturing employment," the economist said. But exports are vulnerable to a stronger dollar -- which makes U.S. products more expensive overseas -- or to uncertain conditions in some big importers such as China, he said.

Other threats to business confidence include rising fuel prices, the expectation of higher interest rates and unsettling events around the world, including Iraq, Hine said.

"But I do think it would take a combination of significant negative shocks to derail the momentum these April numbers reflect," he said.

The writers are at hcummins@startribune.com and jbuchta@startribune.com .

"© Copyright Star Tribune. Republished with permission of Star Tribune, Minneapolis-St. Paul. No further republication or redistribution is permitted without the written consent of Star Tribune."