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Amid a soft US economy, the Twin Cities emerge with jobs

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It's been five years since the recession, and job creation is gaining traction. But one pocket of America is doing especially well in this recovery—the Twin Cities of Minneapolis and St. Paul in Minnesota.

The Twin Cities jobless rate of 4 percent for May is the lowest unemployment rate of any large metropolitan U.S. area, according to U.S. Department of Labor data released this week. So what's the Twin Cities got that's eluding other corners of the U.S.? A lot, actually.

There's a thriving start-up community that's building ventures on top of name-brand social platforms such as Twitter and Facebook. Some of the region's largest employers are in health care, which broadly has muscled through the downturn as aging Americans with more income seek better care. Adding to the area's good fortunes, the Twin Cities is feeling the ripple effects of the Bakken shale oil fields in the neighboring state of North Dakota.

"The stars seem to be aligning for us these days, they really [are]," said Louis Johnston, an associate economics professor at the College of St. Benedict and St. John's University.

Rounding out the five major metro areas with the lowest unemployment rates are Austin, Texas, with a 4.1 percent rate; Columbus, Ohio, and Oklahoma City tied at 4.4 percent, and Boston with an unemployment rate of 4.7 percent, according to the data.

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In a separate report, private sector U.S. job creation surged in June, with companies adding a much-larger-than-expected 281,000 new positions, according to a report earlier Wednesday from ADP. Small businesses and the service sector led the gain in jobs.

Lessons in diversification

In many ways, Minneapolis-St. Paul has what many city planners would kill for—diversification of sectors. When a Ford plant shuttered a few years ago and about 1,000 jobs were lost, other industries remained resilient.

Unlike, say, Milwaukee, which is tied to manufacturing jobs and shifts overseas, Minneapolis-Saint Paul staked claims in other industries including health care. The Twin Cities' largest employers include UnitedHealth Group, the University of Minnesota and its large health-care complex, and Medtronic, a medical device and technology company. The region also gets foot traffic from the Mayo Clinic in Rochester, Minnesota.

Another sector fueling the Twin Cities is agriculture. Businesses are working in agricultural chemicals and related fields, said Johnston of the College of St. Benedict and St. John's University. The food and agricultural company Cargill is headquartered in the area.

Another active industry is transportation. For example, Miller Ingenuity in Winona, Minnesota, has been manufacturing railway component solutions for some 60 years and counting. While around 5 percent of its business is tied to the shale oil boom, they've benefited from a broad pickup in commodities including coal. Just in the last few years, more than 25 percent of its sales now are overseas.

"Even though people say the economy is soft right now, I don't see it," said Steve Blue, chief executive of Miller Ingenuity, which employs about 60 people.

And speaking of transportation, light-rail trains began connecting the downtowns of St. Paul and Minneapolis earlier this year.

Even during the depths of the recession, the Twin Cities' unemployment rate peaked at around 8.5 percent in 2009. Compared with other cities that saw steeper declines, Minneapolis-St. Paul's bottom wasn't that deep.

Higher pay, meanwhile, could create potential speed bumps for the regional economy. Minnesota lawmakers in April approved lifting the state minimum wage to $9.50 an hour over three years.

Life is good in the Twin Cities

But overall, life today in the Twin Cities is good, post recession.

Just swing by the "North Loop" neighborhood of Minneapolis. The district of warehouses used to manufacture everything from farm equipment to bicycles. "It was a ghost town in the '70s," recalled Johnston of College of St. Benedict and St. John's University.

The five- to 10-story brick buildings now are hopping with start-up activity. Johnston added, "It looks like Brooklyn."

By CNBC's Heesun Wee

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