Q2 2012 Minneapolis, Minnesota Commercial Real Estate Economy

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Q2 2012 Minneapolis, Minnesota Commercial Real Estate Economy

Metropolitan Minneapolis continued to prosper in the second quarter of 2012, with an unemployment rate that, while now low, is no longer high, and steady employment gains. According to Current Employment Survey (CES) data from the U.S. Bureau of Labor Statistics (BLS), total non-farm payroll employment increased by 21,900 jobs (1.2%) from June 2011 to June 2012. The increase in the number of employed residents of the Metropolitan Statistical Area (MSA) including the self-employed, as measured by household-based data from the BLS, was even greater at 36,160 (2.1%) year-over-year. Job seekers seem to have noticed, as this source reports the labor force is up by 20,140 (1.1%) year-over-year. Otherwise, unemployment would have fallen more.

Unusually for the Midwest, population growth in the Twin Cities area is generally at or above the U.S. average, and Moody’s Economy.com projects a gain of 1.2% (40,490) in 2012 with just slightly smaller gains forecast for subsequent years. Household average income, however, slipped 0.1% from a year earlier as of the second quarter. CES data report weakness in consumer-driven sectors, with year-over-year employment as of June falling by 100 (0.1%) in Retail Trade, 900 (0.5%) in Leisure and Hospitality, and another 3,000 (5.0%) in Construction and related sectors. Within the Other Services sector, the Personal and Laundry Services industry lost 500 jobs (2.4%). Distribution is more local than national here, and an increase of 800 jobs (1.0%) in the Wholesale Trade sector was more than offset by a loss of 1,200 (2.2%) in Transportation and Warehousing. Fiscal crisis are biting as well, with the Government sector down another 2,400 jobs (1.0%). So some local residents may not have noticed an incipient boom, and certainly have not returned to free-spending ways.

But a boom there is, in activities not driven primarily to local consumer demand. The CES data show the Professional and Business Services sector added 15,700 jobs (5.9%) in the year to June 2012, following a gain of 10,100 (4.0%) in the year to June 2011. Employment in this sector is at a new high. Within it, the Employment Services industry, which includes temporary employment agencies, saw an increase of 7,100 jobs (15.6%) in the latest June-to-June period. Adding to office-based strength, there was a gain of 1,700 jobs (1.2%) in the Financial Activities sector. The similarly white collar but generally institutional Education and Health Services sector gained 7,200 jobs (2.6%), despite government funding problems.

And the Manufacturing sector posted a gain of 2,300 jobs (1.3%), paced by an increase of 1,900 (7.2%) in the Fabricated Metal Products industry.