State's recovery appears to slow

Jul 15, 2010 — The Boston Globe

By Robert Gavin

Jul. 15, 2010 (The Boston Globe delivered by Newstex) -- The Massachusetts economy showed signs of slowing in June, even as private sector employers added jobs for the sixth consecutive month and the state unemployment rate fell to its lowest level in nine months.
The state gained 3,400 private sector jobs last month, the Executive Office of Labor and Workforce Development reported yesterday, but the pace of growth slowed considerably, from about 7,000 private sector jobs in May and more than 15,000 in April.
The state jobless rate declined to 9 percent from 9.2 percent in May, but much of that decline was attributed to workers giving up their job searches and dropping out of the labor force. Only those who actively seek work are counted as unemployed.
``There's no question things are improving, but very slowly and modestly,'' said Elliot Winer, an independent economist in Sudbury. "We've got a long ways to go before we get out of this hole.''
The slowdown in Massachusetts reflects the weakening of the economic recovery nationally, as the impact of federal stimulus programs faded and the European debt crisis weighed on financial markets and global economic growth. The nation added just 83,000 private sector jobs in June, after gaining a disappointing 33,000 in May.
The national unemployment rate fell to 9.5 percent last month, from 9.7 percent in May, but that decline, too, was largely due to workers who stopped looking for jobs and dropped out of the labor force. It's a troubling sign, economists said, because the labor force typically expands during a recovery, as workers sense improved prospects and resume job searches.
``You're not seeing a lot of confidence from job seekers,'' Winer said.
The Federal Reserve, meanwhile, has revised its economic forecast downward, projecting a slower recovery, according to minutes of the Fed's June meeting released yesterday. Fed policy makers don't expect the nation to slip back into recession, according to the minutes.
Any national slowdown would weigh on the Massachusetts economy, said Alan Clayton-Matthews, an economics professor at Northeastern University. Still, he said, continued employment growth in Massachusetts is encouraging, particularly after strong gains in May and April.
``The decline in the labor force is something to watch, but I'm not worried about it yet,'' Clayton-Matthews said. "In this stage of the recovery, 3,400 private sector jobs is still good, and our recovery is still stronger than the nation's.''
June's job gains are "another clear indicator that Massachusetts is on the road to recovery,'' Governor Deval Patrick said in a statement.
``With six straight months of private sector job growth, Massachusetts continues to lead the nation out of this recession,'' Patrick said. "Still, I know that there are too many people looking for work. For them and for our future, we will keep pushing forward.''
But Patrick's Republican opponent, Charles D. Baker, said the economy is rebounding too slowly to regain the jobs lost during the recession. The state still has 122,000 fewer jobs than it did in March 2008, when employment last peaked.
``This is no time for Governor Patrick to take a victory lap,'' Baker said. "It's no wonder people have lost hope in finding a job, since Governor Patrick has refused to rule out raising taxes and continues to ignore the reform policies that will put Massachusetts on a solid path to recovery.''
State Treasurer Timothy P. Cahill, an independent candidate for governor, welcomed the job gains, but emphasized that some 320,000 Massachusetts residents remain unemployed.
``Overall the governor's policies over the last four years have resulted in a net loss of tens of thousands of jobs,'' Cahill said in a statement. "It's time to get serious about cutting taxes, which will allow small businesses, the true economic engine for our state, to flourish.''
The state last month added a net 500 jobs, with private sector gains offset by the loss of 2,900 government positions, primarily due to the end of temporary US Census jobs. The largest employment increases were reported in the leisure and hospitality sector, which added 4,100 jobs, and construction, which gained 2,000 jobs.
Educational services, which includes universities and colleges, experienced the greatest loss, at 6,100 jobs, but state officials said the adjustment for seasonal variations probably overstated the decline.
The employment figures, typically reported the third Thursday of the month, were released a day early, after a draft report was mistakenly e-mailed to people outside the Patrick administration, and forwarded to the Associated Press.
Robert Gavin can be reached at rgavin@globe.com.

Newstex ID: BGL-1035-46985931