Worcester economic growth increased in Q3

Thomas White, associate professor in the Department of Economic and Global Studies at Assumption College, puts out the Worcester Economic Index quarterly to avoid weekly swings in the numbers.

Write a Comment

By Sam Bonacci

Worcester’s economy grew in the third quarter of 2016 at a 3.5 percent annualized rate, but is expected to cool off slightly in the coming quarters, according to the quarterly Worcester Economic Index (WEI).

The WEI is a quarterly economic analysis compiled by Assumption College Professor of Economics Thomas White, estimated using Bureau of Labor Statistics (BLS) data on employment and unemployment for the Worcester metropolitan area, all of which have improved over the past year.

According to the BLS Current Population Survey, employment in the Worcester area has risen by about 1.9 percent over the 12-month period ending in September 2016, while the BLS payroll survey provides a similar estimate of 2.1 percent employment growth during the same period. In addition, the Worcester unemployment rate fell to 3.7 percent in September, which is down from the 4.8 percent estimate in September 2015.

However, the strong growth in the last two quarters is expected to cool down a bit, according to White.

“Over the coming six months, the WEI is expected to continue to grow, but at a more modest pace than the past two quarters,” White said in a statement. “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 projected to grow at a little more than 2 percent over the next two quarters.”

As with the past two quarters, online help-wanted advertisements have fallen substantially compared to a year ago (24 percent), but White noted that they have fallen at the national level as well. Compared to the third quarter of 2015, initial unemployment claims are up just 0.2 percent, so while technically a negative signal, White argued that the rise in claims is so small that it is basically neutral at this time. However, new business incorporations continue to rise, up 19 percent since last year.

“An increase in incorporations is considered a positive signal because new businesses may look to hire workers in the near future,” White said in a statement.