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Business & Tech

Economy Continues to Send Mixed Signals: North Central Region Relatively Resilient

The Hartford labor market – which includes north Central Connecticut – is expected to add 8,000 jobs, UConn economists have projected. But concerns persist over the private sector's ability to spur aggregate demand.

The Hartford labor market – which includes north central Connecticut – has posted reasonably good job gains in the first quarter of the current fiscal year compared to the same period in 2010.

In the latest issue of the University of Connecticut’s “CT Economy,” released Monday, economists estimate that the region will add an estimated 8,000 jobs in the next year or so. However, this is contingent upon the state’s projected addition of 20,000 jobs.

The unemployment rate in the Hartford labor market dropped from 9.9 percent in the first quarter of 2010 to 9.5 percent in the first quarter of 2011. The region’s labor force increased by 2.4 percent to 98,300 in the education and health sectors; 0.8 percent to 56,500 in the manufacturing sector; 3 percent to 58,300 in the business and service sector; 1.2 percent to 85,000 in the transportation and utilities sector; and 1.7 percent to 87,900 in the government sector. By early 2012, the unemployment rate is expected to drop to 8 percent, the report predicted.

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There’s more good news. Statewide, personal income posted a four-quarter increase to 4.7 percent. However, gains from this growth could be negated by an increase in commodity prices – gasoline prices are as high as $4 per gallon.

Moreover, with the state government pulling back on the Keynesian formula to boost aggregate demand by adapting the opposite – increasing taxes, cutting back spending, and reducing public sector jobs – the onus on boosting aggregate demand, and therefore the state’s gross domestic product (GDP), is now on the private sector.

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“The consumer sector – retail and restaurant – suffered in the first quarter of 2011 because of an increase in gasoline prices. Consumers couldn’t keep up with purchases,” Steven Lanza, UConn economist and editor of “CT Economy,” said.

“The public sector had propped up the economy through aggregate demand and now we must see if that can shift to the private sector,” he said.

Lanza pointed out that the region’s strength lies in its manufacturing and export base, which is expected to add significantly to the state’s GDP growth.

“There is cautious optimism from technology and manufacturing firms in north central Connecticut,” said Peter Gioa, an economist at the Connecticut Business & Industry Association, whose members are located in north central towns. 

“The export figures have been pretty darn good and there is potential for firms to hire more workers. But they’re not hiring now because of concern over energy prices; a lot of companies are adding overtime instead. Sales orders are still strong,” Gioa said.

In fact, companies in niche industries such as aerospace are riding the tailwinds of strong orders at Fortune 500 heavyweights.

“If I didn’t watch the news, I wouldn’t know we’re in a down economy,” said Christian Queen, CEO and owner of Manchester-based Highland Manufacturing, a United Technologies Corp. supplier.

“As of March 2011, sales rose 10 percent from the same quarter last year. In 2009 we were considering voluntary layoffs, now we’re looking to do training programs,” Queen said.

However at the macro economic level statewide, weakness in the housing sector coupled with job losses in other parts of the state is expected to dampen growth prospects. The state’s GDP is expected to grow a meager 1.8 percent in 2011 and dip to 1 percent in 2012.

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