Clayton-Matthew explains resurgent growth overtaken by impacts from tax and sequestration

Mass. loses 5,500 jobs in March; jobless rate 6.4%

Massachusetts job growth took a hit last month as payroll tax increases and federal budget cuts have begun to grip the local economy tighter, particularly in sectors like construction, manufacturing and professional, scientific, and business services, experts said today.

“Those have offset the positive impacts we were seeing at the beginning of the year for pent-up demand,” said Northeastern University economist Alan Clayton-Matthews. “The economy is in the best shape it’s been in for many years. That led to what looked like a resurgence in economic growth, which is now being overtaken by the downside impacts of increased tax rates and lower federal spending through sequestration.”

“Europe hasn’t fixed itself,” Clayton-Matthews added. “It’s continued to be a drag on the Massachusetts economy.”

The state, which added a mere 500 jobs in February, lost an estimated 5,500 jobs in March, while the unemployment rate edged down a tenth of a percentage point to 6.4 percent.

While the education and health services and leisure and hospitality sectors saw job gains last month, professional, scientific and business services lost 3,400 jobs over the month.

“That sector has been growing quite strongly in recent years, fueled by the innovation economy here,” said Michael Goodman, a public policy professor at the University of Massachusetts Dartmouth. “The decline in professional and business services is consistent with what one would expect from the kinds of cuts that have been taking place at the federal level.”

Construction lost 1,100 jobs and manufacturing lost 100 jobs in a month’s time, according to federal data.

While Clayton-Matthews said he didn’t anticipate job losses this large, the trend would not last in the ensuing months.

“Just because we had such extremely fast job growth at the beginning of the year means that employers didn’t have to hire as many employees over the next couple of months,” he said. “I expect to see slower job growth over the next several months but I do not expect to see continued job losses of this magnitude.”

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