New data paint a starkly different picture of the Massachusetts economy over the past two years, indicating that job growth slowed sharply in 2015 and contradicting earlier estimates that heralded it as a banner year for the state’s labor market.
The revisions suggest that job creation in this expansion peaked in 2014 and the state is heading into a period of slower and likely diminishing job growth as the Massachusetts economy nears full employment — generally viewed as a unemployment rate of less than 5 percent — and baby boomers retire. Annual job growth, now estimated at 2.4 percent in 2014 and 1.2 percent in 2015, is projected to slip to 0.7 percent by 2018, according to recent forecasts.
Massachusetts gained 41,100 jobs in 2015, a significant decline from the increase of 73,800 jobs first estimated by the US Labor Department. The revised figures suggest that Massachusetts was affected by the same forces that buffeted the US economy, including slower global growth, unsettled financial markets, and a stronger dollar, which hurts manufacturers by making the products they sell overseas more expensive.
The record snowfall in the first few months of last year also curbed job expansion.
“We had been talking about 2015 as the best year of growth since the start of this century,” said Michael Goodman, executive director of the Public Policy Center at the University of Massachusetts Dartmouth. “The highs in 2015 weren’t as high as we expected.”
The revisions, released on Thursday, were part of annual update of job estimates by federal labor officials based on additional information that becomes available later through a quarterly census of employers.
The revisions offered a much brighter picture of job creation in 2014. Massachusetts employers added 83,000 jobs that year — easily the most since 2000 — compared to earlier estimates of 61,000. While job creation has since cooled, it still remains steady and spread through most sectors of the Massachusetts economy, said Ronald L. Walker II, the secretary of labor and workforce development.
“What this indicates is there is strong growth, but at a slightly slower pace,” Walker said.
The Massachusetts economy, supported by its technology, education, and health care sectors, rebounded from last recession faster and stronger than the nation as a whole, with unemployment tracking below the national average. While 2014 proved to be a great year for job creation in the state, employers couldn’t maintain such a pace in 2015, economists said.
The updated data provide a more realistic view of the state’s economy, said Andre Mayer, former research director at Associated Industries of Massachusetts. Weak economic conditions in Canada and Europe, the state’s biggest trading partners, are taking their toll. The state and national economy are also approaching levels of full employment, making it harder for employers to find workers with the skills they need, Mayer said.
“We are seeing the tightening of the labor market,” Mayer said. “That does play into the slower job growth.”
That may bode well for wages, which will likely increase as employers are forced to compete for workers, Mayer said.
The state’s Executive Office of Labor and Workforce Development reported Thursday that the state unemployment rate fell to 4.7 percent from a revised 4.9 percent in December. The US unemployment rate also was 4.9 percent in January.
Massachusetts employers, however, shed 2,500 jobs in January, the first job losses in four months for the state.
Jobs and unemployment statistics are based on different surveys and don’t always correspond on a month-to-month basis. Job figures are estimated from a survey of employers; the unemployment rate on a survey of households.
In January, job gains were led by the trade, transportation, and utilities sector, which added 3,800 jobs, and construction, which gained 2,200.
Education and health services lost 2,400 jobs last month, professional and business services lost 2,300, and leisure and hospitality shed 2,100.
Despite the slackening pace of job growth, economists said they are not concerned that the weakening global economy will drag the United States and Massachusetts into recession.
“Our highest hopes weren’t realized, but neither were our worst fears,” Mayer said. “We’re chugging along. We did create more jobs, just at a slower rate.”