South Dakota nonfarm industry trends in 2007

This article was published in the February 2008 South Dakota Labor Bulletin.

Nonfarm wage & salaried workers by industry

All data is given in annual averages of non-seasonally adjusted data.

South Dakota statewide total nonfarm employment grew by 7,800 workers (or 2.0 percent) from 2006 to 2007 and continues on a five-year growth trend. All but 300 of the worker growth came from private businesses. South Dakota has been doing quite well when using the United States 2007 national benchmarked annualized growth of 1.1 percent as a reference.  

Worker growth in South Dakota was disbursed among all industries. Natural resources, mining and construction grew by 300 workers (or 1.3 percent) from 2006 to 2007. The annualized growth in this industry has started to slow.

Manufacturing grew by 400 workers (or 1.0 percent) and produced a 2007 average level of 42,000 workers.  South Dakota’s statewide manufacturing recovery started in January 2004 and still continues, but the worker level has not reached the previous high of 44,200 in 1999. In comparison, national manufacturing estimates have not shown annualized growth since 1998.

Retail trade had a turbulent year in 2006, but regained its growth pattern for most of 2007 to post an annualized gain of 1,000 workers (or 2.0 percent).  The concerns of a national economic slowdown have had an effect on this industry’s worker growth, as well as in the construction and  leisure and hospitality industries.

Worker levels in the financial activities industry grew by 1,300 workers (or 4.4 percent) over the year.  In the 1990s, financial activities was one of South Dakota’s fastest growing industries. The growth was a result of banking reform laws that eased competition restrictions while allowing institutions to expand their financial services. During the 1990s and into 2001, the industry enjoyed over a 60 percent increase in workers. As with most rapidly expanding industries, major mergers and reorganizations started taking place, which basically stagnated worker growth from 2002 to 2004.  Worker numbers started climbing once again in 2005.

Professional and business services added 1,900 workers (or 7.4 percent) and produced its third consecutive annualized gain since 2000. The recession that took place in 2001 lowered the demand for many of the services this industry provides to other businesses. The increase in worker levels for this industry in 2007 indicates South Dakota’s overall economy is doing well.

Education and health services increased by 1,500 workers (or 2.6 percent). The healthcare and social services industry produced almost all of the worker gains and is continuing a lengthy growth trend. South Dakota healthcare has been a growth industry since data was first recorded in 1972. This growth trend has continued for several reasons, including continued population growth, the advance of technology and new medical discoveries that enhance or extend human life. Another reason for continued worker growth is people are living longer, which corresponds to the need for increased healthcare services.

Nonfarm Wage and Salaried Workers in the Metropolitan Statistical Areas

Rapid City MSA

Rapid City MSA total nonfarm employment grew by 800 workers (or 1.3 percent) from 2006 to 2007. The annualized growth rate for this area has held steady since 2004. The Rapid City MSA is unique in the fact it capitalizes on visitors moreso than the rest of the state, which is why the MSA has a high percent of workers in the retail trade and leisure and hospitality.

Sioux Falls MSA

The Sioux Falls MSA total nonfarm employment grew by 3,900 workers (or 3.0 percent) from 2006 to 2007 and made up half of South Dakota’s total worker growth. The rate of worker growth for the Sioux Falls MSA outpaced statewide, the Rapid City MSA and the balance of state area. Population shifts have been most favorable to the Sioux Falls MSA and caused many service and goods producing industries to add workers just to keep pace with demand. There were no industries in the Sioux Falls MSA that exhibited annualized worker losses from 2006 to 2007.

Balance of State Nonfarm Worker Trends

The balance of state area is comprised of all counties in the state not designated as MSA counties, which includes all counties in South Dakota except Pennington, Meade, Lincoln, Minnehaha, McCook and Turner counties. The balance of state data allows one to see how industries are doing in the more rural areas of South Dakota.

The balance of state total nonfarm employment grew by 3,100 workers (or 1.5 percent) from 2006 to 2007. This is good news for rural development as more communities share in the job growth and prosperity that is happing in South Dakota.

Balance of state manufacturing grew by 700 workers (or 2.8 percent) and reflects the trend of manufacturing production taking place outside the MSAs. It is not just ethanol refineries that are causing the manufacturing industry to expand in the balance of state.

Retail Trade grew by 400 workers (or 1.6 percent) and reflects an ongoing trend of building large retail outlets outside of the MSA to support the more rural areas.  Another trend is financial institutes being built in or near the new retail outlets.

Professional and business services added 900 workers (or 8.0 percent). As mentioned before, the increase in worker levels for this industry indicates South Dakota’s overall economy is doing well, and is doing well in the rural areas.

Education and health services increased by 600 workers (or 2.3 percent). As with statewide, the healthcare and social services industry produced almost all of the worker gains in the balance of state too. 

The source of nonfarm wage and salaried worker data

Nonfarm wage and salaried worker data produced by the Labor Marker Information Center is based on the monthly Current Employment Statistics (CES) estimates. South Dakota establishments in more than a dozen different core industries are surveyed through the CES program. The program is a federal-state cooperative one, which each individual state has been a part of since the program started in 1939.

The federal partner is the U.S. Bureau of Labor Statistics (BLS), which provides funding, guidelines and support to all states so estimated and historical employment, hours and earnings data can be computed and maintained for each individual state and at a national level. (Click here to see national CES data).  Since all states use the same BLS guidelines to maintain historical data and produce nonfarm worker estimates, all data is comparable. (Click here to see all states' CES data).

Analysis of worker trends has been established as one of the best ways to gauge a state’s (or individual industry’s) economic health. The logic is simple and has stood the test of time: businesses typically hire when their goods or services are in demand and reduce worker numbers as demand for their goods or services decline. That is why the CES survey is one of the most watched and used time series and current economic indicators available.

On an annual basis, state and national estimates are benchmarked (revised) using data from other sources not available at the time of estimation and publication. These sources track actual employment counts and are used to revise estimated data. Please note 2006 and 2007 nonfarm wage and salaried worker data was recently benchmarked, and the revised estimates replace previously published nonfarm worker data. Thanks to the constant reporting of the surveyed establishments, South Dakota estimated total nonfarm data had only small percentage revisions.

Click here for more information on the Current Employment Statistics (CES) Program, including definitions.