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The Boston Globe

Business

State unemployment rate rises again in July

Massachusetts added a meager 300 jobs in July and the unemployment rate rose to 7.2 percent, the highest level in nearly two years, state officials said Thursday.

The state unemployment rate has risen in each of the past three months as the economy has deteriorated under the weight of steep federal budget cuts and a slowing global economy, said Daniel Hodge, director of economic and public policy research at the University of Massachusetts’ Donahue Institute. The US unemployment rate averaged 7.4 percent last month, down 7.6 percent in June.

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“The unemployment rate is going up while the US unemployment rate is going down,” Hodge said of the report. “So it’s definitely disappointing in that respect.”

The state Executive Office of Labor and Workforce Development also reported that the job market was much weaker in June than first thought. The state initially estimated that the state economy added 2,800 jobs in June, but that figure was revised to show a loss of 2,100 jobs.

Employment and unemployment data are subject to frequent revisions.

The Massachusetts economy, after strong growth in recent years, has slowed noticeably in 2013. The state has shed about 3,000 jobs since January, while the unemployment rate has increased half a percentage point.

Federal budget cuts, weakening economies in key foreign markets such as Europe and China, and uncertainty about US economic policies are among the reasons that economists have cited for the state’s slowing expansion — despite an improving housing market.

‘Maybe the economy is crouching, waiting to leap forward, but so far we’re not seeing the leap.’ —ANDRE MAYER, senior vice president for research, Associated Industries of Massachusetts

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Last month, the University of Massachusetts estimated that the state economy grew at an annual rate of less than one percent between April and June, compared to 1.7 percent for the US economy.

“All the forecasts showed the economy picking up later in the year, but this is the start of quarter three, and it sure hasn’t happened yet,” said Andre Mayer, senior vice president for research at Associated Industries of Massachusetts, the state’s largest employer group. “Maybe the economy is crouching, waiting to leap forward, but so far we’re not seeing the leap.”

In July, private sector employment gains, about 2,500 jobs, were mostly offset by loss of 2,200 government jobs. Local governments, which shed 1,600 jobs, accounted for most of the losses.

Education and health services, a sector that relies heavily on federal spending, shed 1,100 jobs in the last month. The manufacturing sector lost 400 jobs in July.

Leisure and hospitality, which includes hotels and restaurants, added 1,700 jobs in July. Trade, transportation, and utilities gained 1,500 jobs, information services 800, and financial activities 500.

Professional, scientific, and business services, which includes a variety of technology, research, and consulting firms, gained just 100 jobs over the month. Construction employment was flat.

Michael Goodman, a public policy professor at the University of Massachusetts at Dartmouth, said he was not surprised by the weak employment report. Federal policies have cut spending, resulting in slower economic growth, he said.

For now, he said, the Massachusetts’ economy is “treading water.”

“The state is being buffeted by a couple of different forces,” he said. “While this [jobs report] is clearly disappointing, especially for the tens of thousands of workers in Massachusetts who are seeking employment, it’s not terribly surprising.”

Megan Woolhouse can be reached at megan.woolhouse@globe.com. Follow her on Twitter @megwoolhouse.
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