State jobless rate falls to 4.6% in September

The Massachusetts jobless rate last month plunged to its lowest level in more than two years, the sharpest monthly drop since 1981, the state reported yesterday.

State economists, however, cautioned that the steep decline -- to 4.6 percent from 5.4 percent in August -- could have been magnified in the sampling process that estimates employment and unemployment. Wide swings from month to month are not unusual, said Elliot Winer, chief economist at the state Division of Unemployment Assistance.

Nonetheless, Winer said, longer-term trends indicate the state's economy continues to improve, albeit slowly. The unemployment rate averaged 5.1 percent over the past three months, down from 5.9 percent during the same period a year ago. In addition, the state added an average of 9,600 payroll jobs in the three-month period that ended in September, and more than 20,000 since the labor market hit bottom in February.

''The message is positive," Winer said. ''You can be a little skeptical about the numbers, but it's still positive."

Yesterday's report was the latest indication the state is climbing from one of its worst recessions since the end of World War II, although momentum has slowed since a burst of job growth in July. Since then, the state has given back some of the July gains with modest job losses jobs in each of the past two months.

Also, at least some of September's decline in the jobless rate appears due to frustrated workers giving up job searches and dropping out of the labor force.

This slowdown reflects a similar downshift in the national economy. As energy prices and interest rates have risen, and the effect of tax cuts waned, job growth has slowed dramatically. From March to May, the US economy created an average of nearly 300,000 jobs a month; since June monthly has averaged just over 100,000.

The national jobless rate, meanwhile, has barely budged, slipping to 5.4 percent in September from 5.6 percent in June.

Despite the slowdown, economists expect further improvement in both national and state labor markets. David Pace, regional economist at Global Insight, the Waltham forecasting firm, said the trends over the past six months are positive, particularly for some of the state's key job sectors.

In Massachusetts, professional, scientific, and business services, which include consulting and technology firms, have added 4,000 jobs since February. Manufacturing has added 2,000. Pace added the leisure and hospitality sector, which includes hotels and restaurants, has posted strong job gains in recent months, a sign that consumer confidence and spending are improving.

The state shed 800 payroll jobs in September, although much of the net loss was due to a sharp decline government jobs. Private employment, in fact, grew by 2,300 jobs, led by the leisure and hospitality sector, which added 3,400 jobs. The miscellaneous service sector, which includes a diverse mix of employers from repair shops to civic organizations, added 3,100.

The state's biggest employment sector, education and health services also posted job gains, adding 500.

But many of the state's key sectors experienced modest job losses in September. Professional and business service shed 1,100 jobs. Manufacturing lost 800. The information sector, which includes software publishers and telecommunications, lost 1,100 jobs.

Financial services shed 700 jobs and construction 800, the fourth consecutive month of losses for that sector. Economists blame the winding down of the Central Artery project and rising interest rates for the decline in construction employment.

Pace, the Global Insight economist, said that rising energy costs may well be to blame for the retrenchment in other sectors. Surging oil prices are adding to economic uncertainty, and likely weighing on business confidence and hiring decisions, Pace said.

Confidence among Massachusetts businesses indeed slipped in September, according to Associated Industries of Massachusetts. The group's business confidence index fell to 58.6, down three points from August, as firms cited concerns about slowing economic growth and rising energy prices. Despite the dip, businesses still remain optimistic, according to the AIM survey, and that's a good sign for future hiring. Any reading above 50 indicates optimism.

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