Technology sectors drive state growth
Gains in high-tech employment and demand for bioscience and health technology products helped the Massachusetts economy grow at a more than three times the national rate in the first quarter.
The MassBenchmarks Current Economic Index grew at a 4.7 percent annual rate in the quarter, compared with a 1.3 percent rate for the national economy.
First-quarter growth in the state is the fastest rate of growth since the expansion began in the second quarter of 2003.
MassBenchmarks reports are published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston.
"High-tech growth in Massachusetts is still largely east of Worcester," said John Mullin, professor and graduate dean at the University of Massachusetts at Amherst.
"It has not moved out to the west as much as I would have hoped," he said. "I think the last high-tech plant on Route 2 is the Simplex plant in Gardner."
Mullin, noting there is some high-tech business in Springfield, said he thinks emerging clusters of biotechnology and nanotechnology will be increasingly important in this part of the state.
"The biggest economic engine in Springfield is Baystate Health," he said. "We've got to nurture that and encourage spinoffs from it."
He also said some parts of the plastics industry in the central part of the state are "going from plastic forks to high-end polymers like they use in helicopter helmets."
The MassBenchmarks Current Economic Index for March was 167.2, up 5.0 percent from February (at annual rates), and up 4.0 percent from March of last year. The current index is normalized to 100 in July 1987.
The MassBenchmarks Leading Economic Index for March was 3.9 percent, and the three-month average for January through March was 4.6 percent. The leading index is a forecast of the growth in the current index over the next six months, expressed at an annual rate.
The report said strong payroll employment gains and a falling unemployment rate were responsible for the strong showing in the first quarter.
It said the economy should grow at a 4 percent annual rate through the summer.
"The forecast of strength going forward should be viewed with some caution," added Alan Clayton-Matthews, UMass Boston professor and co-editor of MassBenchmarks.
He said softness in the housing market, which is expected to continue, could dampen consumer spending and economic growth.
"In addition, the possibility of rising inflation and a rise in interest rates could further weigh on the state's near-term growth prospects," he said.
May 01, 2007