Mass. unemployment rate jumps to 4.7%

The Massachusetts economy sputtered in September, as companies trimmed payrolls for the second consecutive month and the unemployment rate rose.

The state shed 700 jobs last month, following a decline of 4,500 jobs in August, the state Department of Workforce Development reported yesterday. The unemployment rate jumped to 4.7 percent, up from 4.2 percent in August and matching July's 4.7 percent jobless rate.

Economists had largely discounted August's sharp decline in the jobless rate as a statistical glitch, adding it's best to look at a few months of data.

Over the last three months, the jobless rate has averaged 4.6 percent, compared to 4.7 percent in the previous three months. The state has added 3,200 jobs in the last three months, compared to adding 10,600 in the previous three.

''The overall trend is still up, but not as much as we'd like to see," said Elliot Winer, chief economist at the Department of Workforce Development. ''We seem to have stagnated."

While the state economy has added 29,000 jobs in the last year, it has yet to generate the momentum needed to regain those lost in the last recession. Employment in the past year has grown at about half the national rate. The state has 163,000 fewer jobs than the pre-recession peak in early 2001.

The state also has 12,000 fewer jobs than when Governor Mitt Romney took office.

Romney, weighing a reelection bid next year against a presidential run in 2008, said the state's economy is on the upswing, noting improvement in both employment and unemployment over the last year. In addition, state tax collections -- considered another indicator of hiring and economic activity -- are up solidly, recently surpassing those at the peak of the tech boom.

''There's no question that more people are working and they're getting paid more in total," Romney said. ''It's not a rocket liftoff, but it's slow and steady. Slow and steady is better than a drop-off."

Still, said Andrew Sum, director of Northeastern University's Center for Labor Market Studies, the state's labor market has yet to benefit broadly from the national recovery. Massachusetts has absorbed a greater share of job losses in declining national industries, such as manufacturing, but smaller share of gains in growing sectors, such as financial services.

Education and health services, and leisure and hospitality, which includes hotels and restaurants, are the only Massachusetts sectors adding jobs at close to the national rate, Sum said.

''We're just relying on too narrow a base," Sum said. ''We really need some broad-based growth to generate more jobs."

Gus Faucher, senior economist at Economy.com, a West Chester, Pa., forecasting firm, said Massachusetts' high business costs appear to be a drag on job growth.

''Normally, at this point in recovery, we would expect to see a lot of growth in professional and business services and the financial industry, but we're not," he said. ''Companies are moving jobs to lower-cost places."

Robert Gavin can be reached at rgavin@globe.com.