Jobs Data Paints Murky Picture of Economy

Posted by Andre Mayer on Nov 22, 2013 10:42:00 AM

Job growthNew figures from the federal Bureau of Labor Statistics show that Massachusetts continues to show solid, unspectacular job growth.

The commonwealth added 9,100 jobs in October, 9,400 in September, and 6,000 in August. The September number is a preliminary estimate, while earlier months are revised. Release of the data was delayed by the federal government shutdown.

Since last October the Bay State has added 52,100 jobs, all in the private sector.

Among the industry sectors sharing in this growth are Education and Health Services (+17,300 on the year); Trade, Transportation, and Utilities (+11,400); Professional, Scientific and Business Services (+8,900); Information (+ 6,700, a 7.7 percent gain); and   Construction (+6,300). The manufacturing sector shed 4,300 jobs.

The household survey, by contrast, finds 5,200 fewer Massachusetts residents employed and 15,600 more unemployed, which is why the unemployment rate is at 7.2 percent, up half a point from last October. I have not seen a plausible explanation of this persistent divergence, which makes the state of our economy hard to track.

Topics: Massachusetts economy, Unemployment

Job Growth Halts in Massachusetts

Posted by Andre Mayer on Aug 15, 2013 10:30:00 AM

Employment growth in Massachusetts has ground to a halt.

JobsThe state announced this morning that Massachusetts added just 300 jobs last month (2,500 in the private sector), while revisions turned a preliminary 2,800-job gain in June into a 2,100-job loss. Leisure and Hospitality; Trade, Transportation, and Utilities; Information; Financial Activities; and Professional, Scientific, and Business Services all added jobs in July.

Unemployment rose to 7.2 percent, the third straight monthly increase. The rate was up 0.2 percentage points from June, and 0.4 percentage points from last July. The national unemployment rate meanwhile, declined by 0.8 percentage points to 7.4 percent over the year.

Over the full year, Massachusetts has gained 40,100 jobs, but only 15,900 of those were added in 2013, reflecting slower growth. A separate household survey shows only 5,100 more state residents employed, and 15,000 more unemployed, since last July.

The employment numbers confirm recent statistics showing that while the U.S. economy expanded at a 1.7 percent annual rate in the second quarter of 2013, the growth rate of the Massachusetts economy for the quarter fell to 0.8 percent. Although Massachusetts has recouped the jobs lost in the recession, its unemployment rate is still high and now rising, while national unemployment, even higher, continues to decline.

While this local news is not good, one hopeful sign for Massachusetts comes from Europe, where statistics released earlier this week show the Eurozone returning to growth in the second quarter after six quarters of contraction. These results were better than expected, with actual expansion in the two largest national economies, Germany and France, and improvement in Italy and Spain.

Because Massachusetts ranks second among all states in its dependence on exports to Europe, the recession in the Eurozone has been a significant drag on our economic recovery.

AIM Executive Forum Lynn Dugle

Topics: Business Center, Massachusetts economy, Jobs, Unemployment

Massachusetts Adds Jobs, but Unemployment Rate Rises

Posted by Andre Mayer on Jul 18, 2013 11:41:00 AM

Massachusetts added 2,800 jobs in June but the unemployment rate increased to 7.0 percent, according to preliminary estimates from the U.S. Bureau of Labor Statistics released today by the state's Executive Office of Labor and Workforce Development. May's job gain was revised upward from 3,500 to 6,700.

UnemploymentTotal employment continues to creep ahead, but gains are much slower than they were early in the year. This is in line with the indications provided by AIM's monthly Business Confidence Survey of employers, which shows lower expectations for new hiring based on prevailing economic uncertainties and concerns about the robustness of growth through the rest of 2013.

Over the year, these employment statistics – derived from the BLS's monthly survey of employers – report 40,300 additional jobs in the Commonwealth since last June – a respectable rate of growth that has brought total employment back above its pre-recession level.

The results of the BLS's survey of households are strikingly different, however. These are the numbers used to produce the unemployment rate, which has risen from 6.7 percent to 7.0 percent over the past year. While employers report 40,300 more employees compared to last June, the household survey finds only 3,600 more state residents with jobs; overall, employers report some 78,000 more employees than are found in the household survey. This discrepancy, attributable at least in part to people holding multiple part-time jobs, provides further evidence of lack of vigor in the labor market.

The state employment for June is consistent with the findings on the New England economic situation reported in the Federal Reserve's Beige Book, released yesterday: moderate growth, but generally stagnant hiring. More rapid growth must go hand in hand with more robust job creation.

Topics: Business Center, Massachusetts economy, Unemployment

State Loses Jobs in April; Statistics Lack Consistency

Posted by Andre Mayer on May 16, 2013 2:15:00 PM

"The unemployment rate is based on a monthly sample of households," the state's Executive Office of Labor and Workforce Development reminds each month. "The job estimates are derived from a monthly sample survey of employers. As a result, the two statistics may exhibit different monthly trends."

UnemploymentThat's certainly true of the employment report for April released today.

The headline numbers, showing that Massachusetts' total unemployment rate remained unchanged at 6.4 percent and the Commonwealth lost 1,400 jobs in April, seem perfectly consistent; 1,400 jobs on a base of 3.5 million isn't enough to move the needle. But look more closely and the coherence disappears.

Where the employer survey shows a loss of 1,400 jobs last month, the household survey finds that 2,900 more residents were employed. The annual trends, however, are reversed: since last April, Massachusetts has added 46,200 jobs according to the employer survey, but just 5,000 according to the household survey.

The month-to-month variations, which are products of small sample size and similar issues, are not of great concern. We may over-react to a minor fluctuation – for example, that 1,400-job decline in the April preliminary estimates is more than offset by a concurrent revision that added 1,700 to March's total – but the timeframe is short and the numbers are small; the differences will come out in the wash. If, on the other hand, we don't know whether the state added 5,000 jobs over the past year, or 46,200, we really don't know what's going on in our economy.

The basic problem is that in fact not much is going on. For almost three years, the economy has been re-establishing stability and rebuilding strength, but not generating sustained, robust growth. The up-and-down pattern is plainly visible in the course of AIM's Business Confidence Index, which now seems stuck in the neutral range. The current consensus among economists is that the US economy will continue to grow slowly well into the third quarter before picking up late in the year.

Here in Massachusetts we are feeling negative effects from federal spending cuts and from recession in Europe (which affects us more than the nation as a whole). That we're holding our own in the face of these external forces, and perhaps even moving forward little by little, is evidence that there has been a recovery and that we still have significant competitive strengths.

Topics: Business Center, Massachusetts economy, Unemployment

Some Encouraging April Employment Numbers

Posted by Andre Mayer on May 3, 2013 10:43:00 AM

Total nonfarm payroll employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, food services and drinking places, retail trade, and health care.

This is the opening paragraph of the government’s April employment report – called the Employment Situation news release for April - issued this morning.  Initial media reaction was tepid (“hardly impressive” – CNN) but the markets are up – and they’re right. This is an encouraging report.

UnemploymentA gain of 165,000 jobs in April is respectable, and beats expectations. Revisions to the February and March figures add 114,000 jobs to the year’s total. (March’s revised 138,000 looks a lot better than the 88,000 initially reported.) The headline unemployment rate is down a tenth, which if nothing else will help consumer confidence. We are chipping away at the numbers of long-term unemployed and discouraged workers.

Additionally, most of the sectors gaining jobs – professional and business services, food services and drinking places, retail trade – are those that tend to do well in a growing economy.  Expansion in these areas reflects, to a considerable extent, increases in discretionary spending by businesses and households.

The news could be better, of course. We would like to see more job creation; sustained gains of the order of February’s (revised) 332,000 would bring unemployment down rapidly. A large number of people who want full-time jobs are working part-time, pointing to severely restricted opportunities for the less skilled. But the good signs predominate.

We know that the economy has cooled somewhat after starting 2013 strong, and that employers facing business uncertainties, productivity concerns, and rising nonwage employment costs (notably those arising from the Affordable Care Act) have been careful about adding personnel.  The April employment report suggests, however, that the slowdown is less serious than many had feared.  

Topics: Business Center, Economy, Jobs, Unemployment

Massachusetts Economic Recovery Stronger than 2003-2008 Version

Posted by Andre Mayer on Mar 21, 2013 12:45:00 PM

"The Executive Office of Labor and Workforce Development today announced that Massachusetts has surpassed pre-recession job levels. With revised numbers from the Bureau of Labor Statistics showing more jobs were created in January than initially estimated, there are now 3,318,500 jobs in Massachusetts, compared to 3,304,300 in April 2008."

UnemploymentWhile some might accuse the state of spinning the results in its employment release, or at least burying the lead (only 500 jobs added in February), this was the right opening. The big story here is indeed that Massachusetts has (apparently) surpassed its pre-recession employment level, as a result of slow and unsteady long-term job creation over almost five years.

It's much more significant than the month-to month variations, some of which reflect the statistical weaknesses of a small survey sample and issues of seasonal adjustment. (Could the state really have added almost 20,000 jobs in January and almost none in February?)    

The revised estimates show 18,900 jobs created in January, while the initial estimate for February is 500. The state's unemployment rate was 6.5 percent in February, down from 6.7 percent in January. The national rate was 7.7 percent. Massachusetts added 57,600 jobs during the past year.

Regaining the pre-recession employment level is a landmark achievement in part because it never happened following the previous recession. The all-time peak employment in Massachusetts was 3,385,000 in January 2001; by the end of 2003 the state was down by 206,200 jobs, of which only 125,600 (about 61 percent) had been recouped by the next local peak in April 2008.

In the most recent downturn Massachusetts bottomed out in December 2009 with a loss of 136,000 jobs, but it has since gained 150,100 – which still leaves us down 66,500 from that all-time high 12 years ago.

The "Great Recession" from which we are still emerging was a bad one. For Massachusetts, however, it was not the worst in recent memory, nor is this slow recovery the most frustrating.

Topics: Business Center, Massachusetts economy, Unemployment

Revised Numbers Show Steady Employment Growth in Massachusetts

Posted by Andre Mayer on Mar 7, 2013 4:14:00 PM

Employment in Massachusetts grew more steadily over the past two years than had previously been reported, but the unemployment rate has stalled in the 6.6-6.8% range, according to new data from the U.S. Bureau of Labor Statistics.

The revised benchmark numbers, released in conjunction with the January 2013 employment report, adjust earlier estimates for 2011 and 2012 based on actual reports from employers (though the third quarter of 2012), which are more accurate than the survey data used in the preliminary reports.

The new data show that Massachusetts created 92,800 jobs in 2011 and 2012, one-third (32,100) more than previously estimated. The unemployment rate, meanwhile, barely moved during 2012, never fluctuating by more than a tenth of a point from month to month and ending up at 6.7% in January 2013 compared to 6.8% a year before.

While job growth in most employment during 2011-12 was revised upward, Manufacturing (down 3,600 instead of up 1,200) and Professional, Scientific and Business Services (up 25,500 rather than 32,700) were exceptions. The weaker performance of these sectors, which were hit hard in the recession, requires us to reconsider our understanding of the subsequent recovery.

Manufacturing and Professional, Scientific and Business Services both added jobs in January. Employment in the Commonwealth grew by 16,100, and by 19,300 in the private sector (these of course are preliminary data).

Topics: Business Center, Massachusetts economy, Unemployment

Forecasters Predict Favorable Winds for Massachusetts, U.S. Economy

Posted by Andre Mayer on Dec 7, 2012 11:49:00 AM

The U.S. economy should enjoy favorable winds once it navigates the impending fiscal negotiations in Washington, forecasters predicted at the New England Economic Partnership’s semi-annual Outlook Conference held yesterday at Bryant University in Smithfield RI.

EconomyThe national forecast presented by Edward Friedman, Director, Moody’s Analytics, emphasized that the recovery, though ongoing, lags because of weak hiring.  Job creation is slow despite strong corporate profits and balance sheets, holding back consumer spending even as household balance sheets and house values improve. The Federal Reserve is playing a weak hand well, but fiscal policy is the key to short- and long-term growth.

With regard to the “fiscal cliff” scenario, Friedman noted that the impact of tax increases on the economy would far outweigh that of the spending cuts, especially in high-income states such as Massachusetts. Failure to achieve some kind of resolution in Washington would quickly lead to a recession roughly comparable to that of 2001 – but Friedman put the chances of deadlock at no more than 15 percent.

The Moody’s baseline forecast assumes a “middle-ground” outcome that avoids most short-term impacts: payroll taxes will return to higher levels but most of the Bush tax reductions will stand, and defense spending will fall significantly less than under sequestration.

On these assumptions, the Moody’s forecast shows national economic growth (GDP) rising in the course of 2013 from the current 2 percent annual range to above 4 percent, easing off to the high threes by 2015. This growth should work off pent-up demand for automobiles and houses, and return employment to, or above, pre-recession levels.

The Massachusetts forecast developed by Alan Clayton-Matthews of Northeastern University, a member of AIM’s Board of Economic Advisors, was built off of the Moody’s baseline.  Our state, Clayton-Matthews noted, is experiencing a deceleration for reasons that include a global slowdown affecting key markets, but is in the fourth year of an expansion that has raised Gross State Product (GSP) 4.5 percent above its pre-recession peak, and brought back 87 percent of the jobs lost.

Looking ahead, he forecast moderate GSP growth (2.3 percent) in 2013, accelerating in 2014 (3.8 percent) and 2015 (4 percent) before tailing off to 3.4 percent in 2016 due to workforce constraints. Employment, after edging up in 2013 (0.7 percent), would rise more strongly in the out-years, finally surpassing its peak of 2001, although the unemployment rate would remain above 6 percent into 2015. Because housing has become more affordable, Clayton-Matthews added, Massachusetts employers should find it easier to attract and retain younger workers.

The forecast shows construction, professional and business services, information, leisure and hospitality, and education and health services leading the state’s employment growth through 2016. The manufacturing sector will add jobs, though more slowly, throughout the forecast period.

AIM will offer an in-depth look at what's ahead for the economy in 2013 at the AIM Executive Forum on January 18. Panelists Jerry Sargent, President, Citizens Bank & RBS Citizens, Massachusetts; Katherine Kiel, Professor of Economics, College of the Holy Cross; and Barry Bluestone, Dean, School, of Public Policy & Urban Affairs at Northeastern University will conduct a no-holds-barred discussion about the future for the world economy and what it will mean to employers.

Register for the Executive Forum

Topics: Business Center, Economy, Unemployment

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