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Thursday, May 23, 2013

New Hampshire slower to recover from recession than other New England states

New Hampshire is starting to crawl out of the economic hole caused by the great recession, but unlike recent recoveries, the rebound is lagging behind that of Massachusetts and other parts of New England.

“This is frankly a disappointing performance, compared to past New Hampshire recoveries where we’ve, more often than not, led the rest of New England in terms of job growth,” said Dennis Delay, economist with the New Hampshire Center for Public Policy Studies. “Lackluster is another term.” ...

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New Hampshire is starting to crawl out of the economic hole caused by the great recession, but unlike recent recoveries, the rebound is lagging behind that of Massachusetts and other parts of New England.

“This is frankly a disappointing performance, compared to past New Hampshire recoveries where we’ve, more often than not, led the rest of New England in terms of job growth,” said Dennis Delay, economist with the New Hampshire Center for Public Policy Studies. “Lackluster is another term.”

Delay said that New Hampshire will not return to its pre-
recession level of employment – about 650,000 jobs total – until mid-2014, whereas Massachusetts already has surpassed its pre-recession level of employment, at about 3.3 million jobs. Vermont should return to its pre-recession job total this year.

The six-state New England economy as a whole, with the notable exception of Rhode Island, is entering a period of sluggish recovery, helped by the bottoming-out of the housing market and the wavering strength of manufacturing.

“Job growth is not going to be enough to reduce unemployment significantly,” said Ross Gittell, chancellor of New Hampshire’s community college system.

The two men spoke Wednesday in advance of a Thursday conference at the Federal Reserve Bank of Boston. Sponsored by the New England Economic Partnership, it will discuss economic forecasts for the nation, New England and each northeastern state.

The conference will focus on manufacturing, which remains a strong area for New Hampshire and for the Nashua region, which depends more on manufacturing for jobs than any part of New Hampshire. But it also reflects some of the difficulties facing the economy.

In particular, the report noted, continuing increases in manufacturing productivity due to automation means that business expansion doesn’t produce as many jobs as might be expected.

Gittell pointed to Whelen Engineering in Charlestown, a small town south of Claremont. The company employs about 800 people making lights for emergency responders at a factory that also has a large number of robots and automated equipment.

Because of the advanced technology, it hires fewer people than it would need otherwise – but without the robots lowering costs, Whelen wouldn’t be there at all, considering the state’s high energy and health care costs.

“It’s very similar to what happened in agriculture, close to 100 years ago,” Delay said. “We have many times fewer people working on farms in the U.S. right now … yet agricultural production in the country is higher by an order of magnitude than it was 100 years ago. The same thing is happening in the manufacturing sector.”

In fact, Delay estimated that even as the manufacturing sector grows, the total number of manufacturing jobs in the state is likely to shrink slightly.

Still, the two men said that manufacturing remains the state economy’s workhorse, both because a high percentage of its business is without out-of-state or international clients, and because its relatively high salaries and benefits package put more money into the local economy.

“It is still the largest single industry sector. Of $37 billion total compensation in 2012, almost $7 billion came from manufacturing and the high-tech sector,” Delay said.

Manufacturing accounted for about 25 percent of the state’s and almost one third of the contribution to gross state product of export-based industries in New Hampshire.

The report also predicted that private services employment will increase about 2 percent per year through 2014, “with the highest growth in professional and business services jobs, followed by leisure and hospitality jobs.”

It also said the New Hampshire housing sector “has finally bottomed out, as shown in recent increases in both sales and median home selling prices.”

“A more normal real estate market is expected in the forecast period, with housing permits returning about 6,500 per year,” the report said.

David Brooks can be reached at 594-6531 or dbrooks@nashuatelegraph.com. Also, follow Brooks on Twitter (@Telegraph_DaveB).