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Massachusetts economy slows, but still tops US rate

Global financial turmoil cited as affecting growth

The Massachusetts economy slowed sharply in the third quarter, affected by global uncertainties and turmoil in financial markets, but still expanded faster than the US economy, according to a report by the University of Massachusetts and the Federal Reserve Bank of Boston.

The state economy grew at 2 percent annual rate in the three months ending in September, down from an unusually strong 7.1 percent in the previous three months, according to the report. The US economy grew at a 1.5 percent annual rate in the third quarter, down from 3.9 percent in the second quarter, the Commerce Department reported Thursday.

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Despite the slowing economy, job growth remained strong in Massachusetts, according to the report published in MassBenchmarks, an economic journal published by the UMass Donahue Institute.

The state gained more than 75,000 jobs in the third quarter from the same period in 2014, a growth rate of 2.2 percent. Nationally, employment grew 1.7 percent.

In September, the number of Massachusetts residents filing new claims for unemployment benefits fell to the lowest level since at least 1973, it said. The unemployment rate was 4.6 percent in Massachusetts last month, compared to 5.1 percent nationally.

“Employers are laying people off at a lower rate than they have been in a long time,” said Northeastern University economics professor Alan Clayton-Matthews, who compiled the Massachusetts data for the report. “We could be entering a situation where businesses are going to be competing with one another to hire workers, and that will drive wages up.”

In Massachusetts, wages and salaries grew 5.8 percent in September from the previous year, according to the UMass report, which analyzed state withholding-tax data. Consumer and business spending, as measured by the state’s sales and motor-vehicle tax collections, declined at a 3.4 percent annual rate from the previous quarter, after an unusually strong spending spurt of nearly 16 percent in the spring.

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Clayton-Matthews said the large surge in economic activity between April and June was the result of a surge of worker productivity and spending after a rough winter temporary hobbled the state’s economy.

Greater Boston’s high-tech economy has fueled much of the growth in jobs, but the economists who authored the report said a global economic slowdown poses risks to the expansion in Massachusetts. In particular, the economists cited the sluggish economy in Europe and slowing growth in China, both among the state’s biggest export markets.

The Commerce Department said the slowdown in the US economy reflected a cutback in businesses’ stockpiling of goods, which offset strength in consumer spending. Consumer spending remained solid, rising at a 3.2 percent rate, down only slightly from the previous quarter.


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