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What's Behind Drop in State Jobless Rate?

Posted by Andre Mayer on Jun 19, 2014 11:41:37 AM

The headline number in the state employment report released today by the Executive Office of Labor and Workforce Development is 5.6 percent - the state's May unemployment rate. The rate is down four percentage points from April and 1.4 percentage points from last May, and is well below the 6.3 percent national rate.

Unemployment.JobSearch.SmallThe preliminary figures from the employer survey show Massachusetts adding 9,100 jobs last month, and 49,700 over 12 months.

Looking past month-to-month fluctuations, the annual job gain has been running steady at about 50,000, which is solid if not spectacular. In raw numbers, Massachusetts has recouped the jobs lost in the most recent recession and surpassed its prior all-time high before the previous downturn. Notably, the household survey, which in 2011-13 showed much lower job creation than the employer counterpart, now shows greater employment gains (+63,000).

More than half of the 12-month job increase came in two super-sectors, Education and Health Services (+16,500); and Professional, Scientific, and Business Services (+10,400). The Information sector (+4,400) had the largest percentage gain (5.1%). The only sectors showing losses were Government (-1,600) and Manufacturing (-200).

The May state report reinforces evidence of a shift in employers' hiring policies, moving from a hunkered-down recession/recovery mode towards a greater willingness to add personnel even through periods of slower growth.

What we are not seeing is an influx into the active workforce of people who had been discouraged by a weak labor market from seeking jobs. Because workforce participation remains historically low, job creation is a better indicator of economic progress than the unemployment rate.

Topics: Unemployment

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