Massachusetts real gross domestic product grew at an estimated annualized rate of 3.2 percent in the third quarter according to the MassBenchmarks Current Economic Index, released today by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston. U.S. real domestic product grew at an annual rate of 3.5 percent during the same period according to the advance estimate of the U.S. Bureau of Economic Analysis.

State and national growth slowed a bit in the third quarter following more robust growth in the second quarter and negative growth in the first. Based on the latest available information, we now estimate that in the second quarter the Massachusetts economy expanded at a 4.8 percent annualized rate as compared to the Bureau of Economic Analysis' final estimate of 4.6 percent for the nation. In the first three months of 2014, we estimate that economic activity declined at a 2.4 percent annual rate here in Massachusetts and declined at a 2.1 percent annualized rate nationally.

"After a weak weather-affected first quarter and the rebound in the second quarter, both the Massachusetts and U.S. economies seem to have returned to moderate growth, with some inconsistent signs of acceleration in growth," noted Alan Clayton-Matthews, MassBenchmarks Senior Contributing Editor and Associate Professor of Economics and Public Policy at Northeastern University, who compiles and analyzes the Current and Leading Indexes.

The job market has continued to improve in recent months, despite a temporary decline in retail employment in August due to the Market Basket disruption. Payroll employment in Massachusetts grew at a 2.0 percent rate in the third quarter, and was 1.8 percent higher than the third quarter of last year. U.S. payroll employment also grew 2.0 percent in the third quarter and was 1.9 percent higher than the third quarter of last year. For both the state and the nation, this reflects a slight acceleration in the pace of job growth.

Labor earnings and spending have kept pace with job growth in Massachusetts. As estimated by withholding tax revenues, wage and salary income grew at an annual rate of 9.2 percent in the third quarter and was up 6.1 percent on a year over year basis. Spending on items subject to the regular sales tax and motor vehicle sales tax grew at an annual rate of 1.0 percent in the third quarter, and was up 5.7 percent from the third quarter of last year.

The state's unemployment rate rose from 5.5 percent in June to 6.0 percent in September, just above the U.S. rate of 5.9 percent. However, this modest rise in the unemployment rate does not signal a weakening labor market. Rather, it appears that workers are gaining confidence in the economy and are entering or reentering the labor force in greater numbers. In the third quarter, the state's labor force was 16,900 higher than in the second quarter, an annualized rate of increase of 1.9 percent.

Despite a relatively sluggish global economy, year to date (through August) Massachusetts merchandise exports have grown at a 5.3 percent annual rate, as compared to 3.3 percent for U.S. merchandise exports. U.S. production of information processing and related equipment, a reliable indicator of conditions in the information technology sector, expanded at an annual rate of 5.8 percent in the third quarter and by 1.8 percent on a year-over-year basis.

The MassBenchmarks Leading Economic Index for September was 2.9 percent, and the three-month average for July through September was 2.9 percent. The leading index is a forecast of the growth in the current index over the next six months, expressed at an annual rate. Thus, it indicates that the economy is expected to grow at an annual rate of 2.9 percent over the next six months (through March 2015).

MassBenchmarks is published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston. The Donahue Institute is the public service, outreach, and economic development unit of the University of Massachusetts Office of the President. The Current and Leading Indexes are compiled and analyzed by Dr. Clayton-Matthews, Associate Professor of Economics and Public Policy at Northeastern University and released quarterly by MassBenchmarks.

For a full breakdown of the latest indexes, click here. A comprehensive analysis of the state of the Massachusetts economy can be found in the most recent issue of MassBenchmarks.

For more information please contact:

Dr. Alan Clayton-Matthews Senior Contributing Editor, MassBenchmarks Professor and Director of Quantitative Methods School of Public Policy and Urban Affairs Northeastern University (617) 512-6224 a.clayton-matthews@neu.edu		Dr. Robert Nakosteen Executive Editor, MassBenchmarks Senior Research Faculty Advisor, UMass Donahue Institute Professor of Economics and Statistics Isenberg School of Management University of Massachusetts Amherst (413) 545-5687 nakosteen@isenberg.umass.edu
Dr. Michael Goodman Co-Editor, MassBenchmarks Associate Professor of Public Policy Director, Center for Policy Analysis University of Massachusetts Dartmouth (617) 823-2770 mgoodman@umassd.edu		Daniel Hodge Managing Editor, MassBenchmarks Director, Economic and Public Policy Research University of Massachusetts Donahue Institute (413) 577-2393 dhodge@donahue.umassp.edu