BOSTON — Fewer people were working in Essex County last month, and the size of the workforce in the area was also shrinking, according to the state's monthly jobs report.
"It's clear from the numbers that the state is not generating new jobs at a fast enough pace," Robert Forrant, an economist at the University of Massachusetts Lowell, said yesterday. "All indications are the state is slipping into, if it's not already in, a recession."
In February, Essex County's labor force — the number of people available to work — shrunk by 2,603, from 317,554 to 314,951. The number of people working declined by around 3,000, from 300,103 to 297,935. The figures in the state report did not account for seasonal fluctuations.
An apparent bit of good news was that the unemployment rate for Essex County was 5.4 percent, down slightly from 5.6 percent in January. However, that was because there were fewer people looking for work.
The story was the same statewide. The labor force fell in February by 8,479, to 3.38 million. Overall employment dropped to 3.21 million, down 2,441. The statewide unemployment rate, adjusted for seasonal employment, was 4.5 percent in February.
Linnea Walsh, a spokeswoman for the Division of Workforce Development, was more upbeat about the jobs picture. Walsh said a separate survey of employers showed the state added 18,200 jobs over the past year. She said the state was adding jobs in health care, education and other important areas.
"Over the year, there are employment trends that show job growth in our stronger sectors, which is encouraging," Walsh said.
But economists, like Ken Ardon of Salem State College, said the shrinking labor force is consistent with the start of a recession. To be counted in the labor force, you have to be looking for a job. And as the economy worsens, people out of work become discouraged and quit looking.
"This often happens as the economy slows down," Ardon said.
Why is the economy slowing down?
The main culprit, economists say, appears to be the home mortgage crisis. A spike in foreclosures led banks to tighten credit to consumers and businesses. People end up buying less. Companies feel the pinch and spend less and cut jobs.
The Federal Reserve has tried to head off a recession by aggressively lowering interest rates. Congress and the White House also approved a $150 billion stimulus package, sending people and families checks of between $600 and $1,200 they hope will be quickly spent.
David Tibbetts, general counsel at the Merrimack Valley Economic Development Council and a former state economic official, said not all the news is bad.
He noted, for instance, that according to the state report, 308 more people were employed in the Haverhill area than in the year since February 2007.
Tibbetts also said that regional employers, such as Billerica-based Luminus Devices, are receiving venture capital funding, which translates into hiring.
Jobless rates for Cape Ann
City/Town Feb. '08 unemployment rate Jan. '08 unemployment rate Feb. '07 unemployment rate Feb. '08 workforce Jan. '08 workforce Feb. '07 workforce
Gloucester 6.6% 6.9% 6.7% 16,698 16,767 16,625
Rockport 5.0% 5.2% 5.2% 4,161 4,176 4,148
Manchester 3.3% 3.3% 3.8% 2,766 2,772 2,770
Essex 5.6% 6.2% 4.9% 1,862 1,867 1,839
State 5.0% 5.2% 5.1% 3,384,500 3,401,200 3,393,000
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