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Mass. jobless rate holds steady

Economists cautious as state outperforms nation again in July

By Megan Woolhouse
Globe Staff / August 19, 2011

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Massachusetts continues to outperform the nation in job growth as employers in the state added nearly 13,000 jobs last month, building on strong gains in the first half of this year, the Executive Office of Labor and Workforce Development reported yesterday.

The state’s unemployment rate held steady in July at 7.6 percent, well below the national rate of 9.1 percent in July, the executive office reported. Massachusetts has added more than 50,000 jobs since the beginning of the year.

“We’re seeing strong growth in sectors that have been good for the state’s economy - technology and knowledge-based sectors, professional and business services; manufacturing has been adding a lot of jobs over the past several months,’’ said Northeastern University economics professor Alan Clayton-Matthews. “It’s hard to find a weakness.’’

But there are reasons for caution, Clayton-Matthews and other economists said.

The job numbers, based on a survey of employers, are estimates and subject to revision - sometimes dramatically. Last year, for example, initial estimates showed the state added more than 60,000 jobs in the first seven months of 2010; annual revisions of the data lowered that figure to about 24,000.

Also, a separate survey of households, used to estimate the unemployment rate, showed the number of employed workers in Massachusetts rose by just 400 last month. Meanwhile, the number of people working or looking for work has declined by nearly 20,000 over the past year.

Only those who actively look for work are counted in the labor force. In strong job markets, the labor force tends to grow as unemployed workers who gave up job searches come off the sidelines and resume their searches.

Elliot Winer, chief economist for Northeast Economic Analysis Group in Sudbury, said the survey “suggests discouraged workers giving up and not looking for work.’’ Taken together, the surveys present a mixed outlook, Winer said.

“It’s not anything to jump for joy about,’’ he said, “but it’s a plus not a minus,’’

The overall trend shows Massachusetts economy performing better than the nation as whole. The number of jobs in the state rose 1.6 percent in the first seven months of the year, about double the national rate of job growth.

Education and health services led last month’s gains, adding 3,000 jobs. Trade, transportation, and utilities gained 2,900 jobs. The manufacturing sector added 2,400 jobs, boosted by sales of technology and capital equipment.

Professional, scientific, and business services, which includes a variety of research and technology companies, added 700 jobs in July, the eighth consecutive monthly gain for that sector. Financial services added 600 jobs.

The construction sector lost jobs, and the leisure and hospitality sector, which includes hotels and restaurants, was essentially flat.

Government gained 1,100 jobs last month; 500 federal, 400 state, and 200 local. Over the past year, however, government has shed more than 5,000 jobs.

Gus Faucher, an economist at Moody’s Analytics, a West Chester, Pa., consulting firm, said the government sector has been “a very large drag’’ on the economy, noting the state would be doing even better in its payroll numbers without recent state and local budget cuts.

But, he said, growth in education and health care, where employment tends to be less cyclical, is a positive sign.

“I would expect Massachusetts to continue to lead the nation [in job growth] probably through the rest of the year,’’ he said.

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