By Robert Gavin
Globe Staff
March 24, 2010
Supported by universities and hospitals, and buoyed by a housing rebound, Massachusetts has pulled out of recession ahead of most states and could start to add jobs steadily in coming months, according to a leading economic forecasting firm.
Moody’s Economy.com of West Chester, Pa., which analyzed employment, production, and housing data, estimates that Massachusetts began a recovery in January, becoming one of 22 states with growing economies. New Hampshire, the only other New England state no longer in recession, began its recovery in December, according to Moody’s Economy.com.
“The data has been strong enough to move Massachusetts out of a moderating recession into a recovery,’’ said Gus Faucher, director of macroeconomics at Moody’s Economy.com. “Massachusetts will be seeing job gains pretty consistently from here on out.’’
Moody’s Economy.com is a well-known and widely used economic consulting firm. The state uses the firm’s forecasts for managing the unemployment trust fund, and the New England Economic Partnership, a nonprofit research group, bases its semi-annual forecasts for the region on its data.
While there is no official method of determining when a state comes out of recession, other economists, using different measures, also say the recession has probably ended here. Alan Clayton-Matthews, a Northeastern University economics professor, said a recovery probably began near the end of last year. James Diffley, chief regional economist at IHS Global Insight of Lexington, said the recession in Massachusetts ended late last year, based on the production of goods and services, a common measure of economic growth.
Using a broader measure that considers employment, Diffley said the state is emerging from the recession just about now. “When the first quarter is done’’ at the end of this month, he said, “we can say the Massachusetts economy is out of recession — but barely out of recession.’’
Governor Deval Patrick said these assessments show Massachusetts is on the right path, but the state must remain focused on job creation and promoting innovative industries that drive the economy. “We better not let up,’’ Patrick said. “There are a lot of people out of work and a lot of people concerned about their future. If you’re the one out of a job, you don’t care about statistics.’’
The Massachusetts economy is still struggling as unemployment, 9.5 percent in February, remains at its highest in three decades. But there have been several signs of improvement in recent months, including a small increase in statewide employment last month, the first job gains in nearly two years.
Home sales have risen at double-digit rates from the previous year for four consecutive months, while prices have risen in each of the past two months, according to Warren Group, a Boston company that tracks the real estate market. An improving national economy has helped, too. Yesterday, the Dow Jones industrial average hit a nearly 18-month high, closing at 10,889. The broader Standard and Poor’s 500 index and technology-heavy Nasdaq Composite also rose.
Faucher said the makeup of the Massachusetts economy has helped it emerge from the recession sooner than many other states. The state’s large education and health care sector, which accounts for more than one in five jobs, has grown through the downturn, adding nearly 25,000 jobs since the recession began here in March 2008.
The state has also been bolstered by growing worldwide demand for technology products and increased business spending, said Faucher. Massachusetts has a high concentration of firms that sell goods and services to other businesses.
Meanwhile, there are signs of a thaw in the job market. For example, after holding employment steady last year, Meditech, a Westwood firm that provides information technology systems for hospitals, is gearing up to add about 300 jobs this year, an increase of about 10 percent, said company spokesman Paul Berthiaume. Aaron Green, president of Professional Staffing Group, a Boston employment agency, said his job placements are up about 10 percent from last year. In addition, the number of employers hiring permanent, as opposed to temporary, workers is increasing. Permanent placements rose about 30 percent in the first quarter this year from the last quarter of 2009, Green said.
Kip Hollister, chief executive of Hollister Inc., said her staffing firm has also seen a significant increase in permanent hiring, which is up 25 percent from a year ago. Companies, which cut deeply during the recession and held staff levels low during an uncertain recovery, are finding they can’t put off hiring much longer, she said.
“Everyone has a new sense of confidence,’’ Hollister said. “It’s not going to be a great year, but it’s going to be a good year.’’
It’s certainly going to be a better year for Lynn Vest, who was recently hired by a Natick business software firm after being out of work for more than a year. Vest of Watertown was among the thousands of workers in the financial services industry who lost jobs as that sector crashed at the end of 2008.
“It’s a miracle,’’ said Vest, an application software consultant. “There’s a lot to learn. The first few months are always the hardest, but I’m hanging in there, and I think it’s going to be good.’’
Robert Gavin can be reached at rgavin@globe.com.
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