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State’s jobless rate hits a two-year low

But economists remain cautious

By Megan Woolhouse
Globe Staff / May 20, 2011

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The Massachusetts economy continued to show surprising strength as the state unemployment rate hit a two-year low in April and employers added nearly 20,000 new jobs, officials reported yesterday.

The April jobless rate was 7.8 percent, down from 8 percent in March, according to the Massachusetts Executive Office of Labor and Workforce Development. Unemployment here remains well below the national average of 8.8 percent.

And the net increase in new jobs — 19,500 in April — represented the seventh consecutive month employers added to their payrolls.

The April employment report follows a report two weeks ago that the economy in Massachu setts grew at a much faster pace in the first quarter of this year than in the nation as a whole.

But a local economist cautioned that job conditions may not be as robust as they appear, and reiterated that Massachusetts is more likely to experience slower growth in the near future.

Alan Clayton-Matthews, a Northeastern University economics professor, questioned whether some of the new hiring is seasonal or involves temporary jobs that could disappear by fall.

“It’s a strong employment report, but not as strong as it looks on its face,’’ he said. “This is an economy that, like the nation’s, is still recovering and will be for a couple years.’’

Another reason for caution on the April numbers: Other employment figures that once painted a brighter picture of the Massachusetts economy were recently revised by the US government, showing the state gained fewer new jobs than first thought as it emerged from the recession.

Nonetheless, the April report shows new jobs added throughout the economy, with Massachusetts companies in the leisure and hospitality sector adding 5,600 jobs, while the trade, transportation, and utilities and retail sectors each gained 4,200 jobs. Education and health services companies added 2,700 jobs. Meanwhile, jobs in government fell by 1,000.

One of the beneficiaries is Thomas Lindstrom, a 46-year-old Army veteran from New Bedford who is starting a new job at a nursing home after searching for work for two years. Trained in electronics in the Army, Lindstrom undertook a worker-retraining course and is now certified as a nursing assistant.

“I feel great; I’m standing on top of the world,’’ Lindstrom said.

Acme Packet Inc., a Bedford company that sells Internet voice and video delivery systems, yesterday said it plans to hire 180 employees in Massachusetts this year. The company recently reported that revenue surged 45 percent from last year, and profit during the same period grew 65 percent.

And in Cambridge, the technology company Pegasystems Inc., said it will hire 100 new employees this year — including 75 in Massachusetts.

Becky Smith, vice president of global recruiting, said the hiring is across the board — sales, marketing, legal, and technology-related positions. Smith was one of the company’s recent hires, joining Pegasystems in February.

“I was anxious to join a company at this stage,’’ she said. “We think we’re very well positioned for continued growth.’’

And Massachusetts is expected to continue outperforming the nation as a whole, according to a forecast from the New England Economic Partnership released yesterday. However, the economists repeated earlier cautions that the overall pace of recovery in the region will remain slow through the end of 2013.

Some of the data that still give them pause: Massachusetts has recovered only one-third of the nearly 143,000 jobs that were lost during the last recession, and there are still more than 272,000 residents without a job.

Clayton-Matthews, a forecaster with the organization, also said the unemployment rate in the near future will probably be negatively influenced by a quirk in the way the figure is calculated. Currently, the rate does not count those unemployed workers who have stopped looking for jobs. But as the economy slowly improves, Clayton-Matthews said, more people who had stopped looking for work will resume their job searches, adding to the count of the unemployed.

The Economic Partnership, which held its semiannual conference yesterday at the Federal Reserve Bank of Boston, also estimated the housing market in the state will remain depressed, with prices stagnant, over the next year.

Home prices in the state fell 25 percent during the depths of the housing collapse and have since regained only one-third of their former value, the Economic Partnership said.

The economists also warned of several global factors that could unsettle the recovery, including the debt crisis in Europe, delays in inventory related to the disaster in Japan, and the uncertainty in oil markets.

“There’s a lot of risk out there,’’ said Ross Gittell, a University of New Hampshire economist and Economic Partnership forecaster.

“Don’t expect the unemployment rate to go back to prerecession levels until early 2014.’’

Megan Woolhouse can be reached at mwoolhouse@globe.com.