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Hiring picks up strength in Mass.

16,000 jobs added in best showing in years

Massachusetts employers added more than 16,000 jobs in January, the strongest pace of hiring in years and a bright note in an otherwise tepid recovery.

The state’s unemployment rate held steady at 6.7 percent for the fourth straight month, and remains well below the national unemployment rate of 7.9 percent, the state Executive Office of Labor and Workforce Development reported.

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Both the state and national economies appear to be gaining traction, despite $85 billion in federal spending reductions that went into effect last week, said Northeastern University economist Alan Clayton-Matthews. Businesses, consumers, and investors appear to be gaining confidence that the recovery is picking up speed.

One indicator of that confidence: The Dow Jones industrial average soared to a record highs this week.

“There is a strength in the underlying economy which is coming out now,” Clayton-Matthews said. “We’ve turned the expectations corner.”

The corner was turned when Washington resolved some long-standing tax and policy questions at the end of last year, Clayton-Matthews said. Bruising debates over the debt ceiling followed by an election-year stalemate over reducing the nation’s deficit had left many employers wary of hiring or expanding.

But with the election decided and some battles concluded, the economy has shown signs of improvement. But it remains unclear how long those gains will continue, as Massachusetts weathers federal spending cuts to defense and research through automatic reductions known as sequestration.

Although last month’s job gains were strong, they were not strong enough to lower the jobless rate — in part because of how unemployment is calculated. Discouraged workers who give up job searches are not counted as unemployed. But when they start looking for work again — often because they sense job prospects have brightened — they are again included in the statistics.

If the economy does not generate jobs fast enough to absorb workers entering or reentering the labor force, the unemployment rate could rise.

“We still have a major unemployment problem across the state, especially outside greater Boston,” said Michael Goodman, a professor of public policy at the University of Massachusetts at Dartmouth.

Monthly employment and unemployment statistics are frequently revised by the Labor Department. Thursday, the department released revisions of data collected over the past few years.

The revisions show that the job market in Massachusetts last year was slightly weaker than first reported. The Labor Department lowered its estimate of the number of jobs created in 2012 by 2,200 jobs to 49,400.

The agency also revised its 2011 estimates for Massachusetts to show a much stronger job growth. Last year, the Labor Department said Massachusetts added just 9,000 jobs in all of 2011; it now estimates the state added to 43,400.

Those revisions were expected. After local economists, relying on new data, questioned the estimate of just 9,000 jobs last year, federal statisticians admitted to the Globe that the number was probably wrong.

Elliot Winer, a former top labor economist for the state and chief economist at Northeast Economic Analysis Group, a consulting firm, called the state’s annual job growth “modest, but not great.”

“I don’t think we’re really growing all that much and recovering all that much,” he said, noting that Massachusetts currently has 70,000 fewer jobs than it did in 2000, when employment was at its all-time high.

According to the revised data, Massachusetts gained significant jobs last year in the education and health services sector, which added 13,900 jobs. The professional, scientific, and business services sector, which includes lawyers, engineers, and architects, gained 9,300 positions.

The construction sector added 2,400 jobs over the year, leisure and hospitality industry gained 10,700, and government added 6,200, according to the report.

Manufacturing in Massachusetts shed 2,500 jobs last year, though yesterday’s report said the sector gained 2,300 jobs in January alone.

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