Worcester’s Economy Exhibits Moderate Growth in Second Quarter
WORCESTER, MA (August 16, 2017) — Following a slow start to the year, the Worcester Economic Index (WEI), a quarterly economic analysis compiled by Assumption College Professor of Economics Thomas White, Ph.D., has shown that the greater Worcester economy grew at a modest clip during the second quarter of 2017. Since March, the WEI is up 1.1 percent on an annualized basis.
The Worcester Economic Index is estimated using Bureau of Labor Statistics (BLS) data on employment and unemployment in the Worcester metropolitan area (NECTA). According to the BLS survey of households, the unemployment rate slightly increased from 4.4 percent in June 2016 to 4.6 percent in June 2017, while household employment has gone up by 6,400. The BLS payroll survey also showed an increase in the number of jobs, rising by about 4,200 since last June.
However, according to Prof. White, these numbers are a bit misleading. “After correcting for seasonal variation, we see that the change in employment from both the payroll and household surveys were lower than the unadjusted estimates, with household employment actually showing a decrease during the second quarter,” he said. “The seasonally-adjusted unemployment rate for Worcester was up just slightly since the end of the first quarter. Worcester’s 4.1-percent rate is less than both the national rate, which is 4.4 percent, and the Massachusetts rate of 4.3 percent for June. Taken together, the data shows a labor market that is steady but without much growth, which is the reason the WEI grew at a modest 1.1% rate during the second quarter.”
The forecast of the WEI is based on four national leading indicators, recent WEI estimates, as well as its long-run trend. To supplement this forecast, each quarterly report includes an analysis of several leading indicators that are more closely tied to the local economy. According to Prof. White and the WEI, recent performance of two local leading indicators—new business incorporations for the Worcester NECTA, and initial unemployment claims for Massachusetts—are showing positive signals at this time. Continuing the trend from throughout the past year, the number of new business incorporations in the Worcester area rose in the second quarter of 2017 by nearly 16 percent compared to this time last year. Also, the number of initial unemployment claims filed during the second quarter in the Commonwealth of Massachusetts fell 6.7 percent from the second quarter of 2016.
“These are positive signs for the economy, as an increase in incorporations means new businesses may look to hire workers in the near future, while the drop in initial claims suggests established firms are retaining their personnel,” said Prof. White.
Over the coming six months, the Worcester Economic Index is expected to continue the slow growth experienced during the past quarter. According to the forecast model which utilizes recent movements in the WEI as well as four leading indicators of the national economy, the WEI is expected to grow at just above 1 percent during the latter half of the year.
The next Worcester Economic Indicators report will be issued in November 2017. Additional information about this project is available here.
Kimberly Dunbar, Director of Public Affairs, Assumption College