After slowdown, strong growth ahead for Mass., N.E., forecast say
The Massachusetts’ economy is expected to grow slowly before accelerating in early 2014, benefiting from a boost from unexpected sector -- manufacturing, according to an economic forecast released Wednesday by a group of regional economists.
Although Massachusetts is in the midst of a slowdown in hiring, the five-year forecast by the New England Economic Partnership shows the state’s economy adding jobs at a significant pace beginning next year. Employers will add about 30,000 jobs this year, and more than double that number in 2015, according to the forecast.
The state’s unemployment rate, 6.4 percent in April, is expected to decline to 5.2 percent by the end of 2017, the report said.
“The outlook for the future is much better than it has been and that has a lot to do with restoring confidence and consumer demand,” said Alan Clayton-Matthews, a Northeastern University economics professor and director of the New England Economic Partnership, a nonprofit forecasting group.“By 2015, we’ll be in a growth spurt phase of the recovery where people’s spending catches up to their wants. The jobs, they’ll be there and people will be willing to spend, which begets more jobs.”
Consumer confidence is getting a boost from a slowly improving job market, a soaring stock market, and rebounding housing market. Massachusetts home prices were up by 5.3 percent in February from a year earlier, while residential building permits increased 24 percent.
The forecast predicted continued improvement in housing and more jobs in construction, one of the hardest hit sectors in the last recession.
Manufacturing, which has experienced large job losses in recent decades, is expected to expand over the next few years because of global demand for advanced products made here, including medical devices, specialized materials, and semiconductors.Clayton-Matthews said demand for such products in developing nations will increase over the next decade as global incomes rise.
Across New England, manufacturers will add about 7,000 jobs by 2016, according to the forecast. In Massachusetts, more than 250,000 people, or about 8 percent of the state’s labor force, work in manufacturing.
“The long sectoral decline in the number of manufacturing workers may be over,” the forecast said.
The Massachusetts economy is currently weathering a soft patch after a period of strong growth, slowed by tax increases and federal budget cuts, as well as a recession in Europe, the state’s largest trading partner. Unemployment and underemployment -- those working in jobs outside their career to make ends meet -- continues to be a problem in the state, the report said, “especially for youth, and those without a college education.”
Still, the state has recovered from the last recession faster than the nation as a whole, regaining all the jobs lost in the downturn earlier this year. The state unemployment rate is more than a point below the national rate, 7.5 percent in April.
The report by the New England Economic Partnership also raised questions about whether there will be enough skilled workers in the state to meet employers’ demands as baby boomers retire and leave the work force. As many as 100,000 job vacancies in the manufacturing will be created by retirements, the report said, but there may not be enough student interest in vocational education to fill those jobs or enough capacity in the educational system to train so many workers.
In the six-state New England region, the overall unemployment rate is expected to decline to 5.3 percent by the end of 2016 from 6.9 percent this quarter.Megan Woolhouse can be reached at firstname.lastname@example.org.