Minnesota jobless rate edges up to 1.9% in August, still near record low

Minnesota's unemployment rate ticked up to 1.9% in August as hiring slowed, though the jobless rate remains near a historic low amid a tight labor market.

The state lost 3,100 jobs in August, according to Minnesota Employment and Economic Development officials. State officials also revised July's gains downward to 17,100 from their initial estimate of 19,100.

Minnesota had the country's lowest unemployment rate – 1.8% – for back-to-back months in June and July. Whether Minnesota held that title in August won't be known until Friday, when other states report their monthly figures.

On a call with reporters, Economic Development Commissioner Steve Grove said he did not view August's dip as a sign of an economic slowdown.

"We’re not seeing massive layoffs by Minnesota companies, we’re not seeing unemployment insurance numbers shift really at all, we’re continuing to see a very tight labor market, we’re hearing from employers across the state that they’re hiring hand over fist," Grove said. "We think a lot of the fundamentals here still point to the fact that employers need workers and that jobs are there. So, our view at this point is that this looks like a pause."

The construction industry lost 1,900 jobs in August, or 1.4%, while manufacturing contracted by 3,200 jobs, or 1%. 

Polls show the economy is a top issue in this fall's midterm elections, and both parties watch employment data closely for clues on where Minnesota's economy is headed. Thursday's release is the last one before early voting starts Sept. 23. There will be one more data release before the Nov. 8 election.

The state's tight labor market shows few signs of easing. Minnesota's labor force participation rate has declined two months in a row, to 68.2%, after 15 months of slow upward movement.

Labor force participation among men has ticked up over the past year, but it has remained flat for women. Minnesota's labor force participation rate has trended down over the past two decades because of the state's aging population and retirements.

Minnesota's private sector workers continue to see wage gains that aren't keeping pace with inflation. Average hourly wages for the private sector rose 5.8% over the year in August, better than the national average but below U.S. consumer prices that rose 8.3%.

The wage gains-inflation comparison looks better for Minnesota workers in nursing and residential care, where wages are up 14.7% over the past year, and construction, where wages have risen 8.9%. But the comparison isn't as good for workers in retail trade, where wages are up 2.4%, or durable goods manufacturing, where workers have added 4.2% to their paychecks on average, according to state data.