Minnesota lost 8,600 jobs in May, but labor market remains tight

Minnesota lost a net 8,600 jobs in May and the unemployment rate ticked up slightly, but the labor market remained tight and the number of people working or looking for work held steady, officials said Friday.

The state has experienced a net jobs gain in nine of the past 12 months, adding up to an increase of nearly 35,000 jobs year-over-year, the state Department of Employment and Economic Development (DEED) reported.

May’s 2.8% unemployment rate was up a tenth of a percent from April but lower than the national rate of 4%. Meanwhile, the 68% labor force participation rate — among the highest in the U.S. — outpaced the national rate of 62.5%.

“Despite the labor market loosening ... we know that a shortage of available workers continues to be a constraint on job growth, which again points to the importance of the state’s efforts — and, really, everyone’s efforts — related to workforce development,” DEED Commissioner Matt Varilek said at a virtual news conference.

Minnesota’s private sector led month-over-month job losses with a 9,800-job decline from April through May. Most of that drop happened in administrative and support and waste management and remediation services — a broad category within the professional and business services sector — and manufacturing.

“At this point, it’s one data point, not a trend over time, so I would wait and see what the future months will show us,” Angelina Nguyễn, DEED’s labor market information director, said during the news conference.

Professional and business services also lost jobs year-over-year, which Nguyễn attributed to losses in employment services, a category that includes staffing agencies. That could be related to a slowdown in manufacturing, she said, if the industry is relying less on staffing agencies to fill roles.

Despite the overall decline in new jobs, seven of the 11 “supersectors” that DEED measures added workers from April through May, led by education and health services. That supersector also accounted for the bulk of year-over-year growth with a gain of 31,270 jobs.

Recent jobs numbers have often been revised upward from initial reports. In April, for example, the state revised its February job growth numbers from 100 new jobs to 3,000 added between January and February.