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The 2013 outlook: Slow hiring, then it picks up

The Massachusetts economy grew slowly last year, but economists predict it will gain steam throughout 2013, adding jobs at a moderate pace.

The fastest job growth will occur in construction, as housing and commercial real estate markets rebound, as well as in two technology related sectors, professional and business services and information services, and leisure and hospitality, according to forecasts.

The economy will “slowly accelerate, and by the end of the year we should have stronger growth,” said Northeastern University economist Alan Clayton-Matthews. He added, “The worst may be now.”

A slow pace of hiring marked the final months of 2012 for Massachusetts as concerns about how Congress would manage the combination of tax increases and budget cuts known as the fiscal cliff led both consumers and businesses to hold back on spending. The continued economic struggles in Europe, the state’s largest export market, also had a significant impact, slowing demand for Massachusetts technology, pharmaceutical, and other products made here.

Total Massachusetts exports fell 15 percent in the past three months, even as US exports increased by 2 percent, largely because of the recession in Europe, said Patrick Armstrong, an economist at Moody’s Analytics, a forecasting firm in West Chester, Pa. Europe accounts for 40 percent of Massachusetts’ exports, about double the US average.


Armstrong said a downturn in Germany, which accounts for one-third of the state’s exports to Europe, has contributed to the slowdown here.

Economists expect a slow pace of hiring in the first few months of 2013 because of more uncertainty in Washington as Congress tries to tackle spending cuts to bring the budget under control and faces another crucial vote to raise the nation’s borrowing limit. In addition, federal payroll tax increases that were allowed to go into effect as part of the recent fiscal cliff deal could slow consumer spending.


Economists project, however, that growth here will accelerate later in the year — and describe growth in 2014 as robust — as political issues are resolved, housing markets recover, and national and global economies improve.

The Massachusetts unemployment rate had fallen to 6.6 percent in November, from a peak of 8.7 percent in December 2009. That remains much lower than the national average of 7.8 percent.

Armstrong predicted that Massachusetts’ unemployment rate will rise to 6.8 percent in the first three months of 2013, before declining to 6.4 percent at the end of this year and 6.2 percent by the end of 2014.

“Boston’s recovery next year will be driven in large part by the rebound in residential construction,” Armstrong said. “The Seaport District has been the source of much of this growth, with major projects such as Waterside Place and the Boston Wharf Tower having broken ground recently.”

Clayton-Matthews predicted that the state’s unemployment rate would remain between 6 and 6.5 percent in 2013 and 2014, and then decline slowly to 5.5 percent by the end of 2016.

Clayton-Matthews said the unemployment rate may rise temporarily in 2013 as discouraged workers, who are not counted in the unemployment rate, resume job searches in an improving labor market.

So far, the state has regained about 87 percent of the 143,000 jobs lost in the recession. By the end of 2013, the state should regain all the jobs it lost in the downturn that began here in 2008, according to Clayton-Matthews’ forecast.


Susan Fontana, a spokeswoman for the national staffing agency Manpower Inc., said employers in Greater Boston will be “looking to hire at a solid pace.” According to a recent Manpower survey of local employers, 18 percent of employers said they planned to increase staff in the first three months of the year and 72 percent said they would maintain staffing levels.

Manpower said manufacturers, retailers, the financial sector, and the education and health services sector would probably add jobs. “I would say optimism is increasing,” Fontana said.

At Hollister Inc., a Boston staffing firm, hiring increased significantly last year in the technology and health care sectors, said spokeswoman Trish Bromme.

She said she expected that trend to continue, noting that employers in those sectors are hiring for a variety of positions. Lately, for example, high-tech and health care companies appear to be hiring more sales and marketing employees.

“We’re coming out of the gate this year very strong,” she said.

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