Massachusetts employers in May increased hiring for the first time in four months, but not fast enough to keep the state unemployment rate from rising.
Employers in the state added 3,500 jobs in May, after cutting payrolls in each of the previous three months, the state Executive Office of Labor and Workforce Development reported Thursday. Despite the gains, the state’s unemployment rate rose to 6.6 percent from 6.4 percent in April as an additional 9,000 workers began or resumed looking for work in May.
The economy, however, did not create enough jobs to absorb them all.
“Not much is happening,” said Andre Mayer, the senior vice president for research at Associated Industries of Massachusetts, the state’s largest employer group. “There’s very little dynamism in the labor market.”
After a burst of hiring in January, when the state added 16,000 jobs, employment growth has slowed considerably. Federal spending cuts and tax increases, as well as weak global economic conditions, are weighing on both the US and Massachusetts economies, analysts said.
In May, US employers added 175,000 jobs, but the unemployment rate rose slightly, to 7.6 percent, as more workers entered or returned to the labor force, according to the Labor Department. A growing labor force is generally viewed by economists as a sign of an improving job market since more people tend to look for work when they sense increasing opportunities.
“There certainly are signs that the economy here and nationally is developing some core strengths and is almost straining against the headwinds,” Mayer said. “It will be a disappointment if we can’t get out of this stagnation pretty soon.”
The across-the-board federal spending cuts known as sequestration are among the strongest headwinds, economists said. Massachusetts is particularly sensitive to federal cutbacks because of its concentration of hospitals, universities, and companies that receive billions annually in federal defense and research contracts and grants.
Concerns about the affect of federal cuts have also made Massachusetts companies skittish about hiring, said Alan Clayton-Matthews, a Northeastern University economics professor. Clayton-Matthews noted that some of the strongest job growth in recent months has come in temporary hiring, a sign of continuing caution among employers.
The recession in Europe, the state’s biggest trading partner, is also weighing on the Massachusetts economy, particularly manufacturing, which shed 1,200 jobs last month, Clayton-Matthews said. He expects slow job growth to continue through the summer and fall, before picking up toward the end of the year.
Trade, transportation, and utilities, which includes retailers, led May’s gains by adding 2,000 jobs last month. Construction added 1,000 jobs. Personal and repair services added 900 jobs.
The state’s core employment sectors also posted solid job increased. Professional, scientific, and business services, which includes technology, technical, and consulting firms, added 900 jobs, as did financial services. Education and health services gained 800 jobs.
In addition to manufacturing, the sectors that lost jobs in May were leisure and hospitality, which includes hotels, restaurants, and tourism-related businesses and shed 900 jobs; information, a tech-related sector that shed 600 jobs; and government, which cut 200 jobs.Deirdre Fernandes can be reached at firstname.lastname@example.org. Follow her on Twitter @fernandesglobe.