State shows no job gains

For the first time this year, the state failed to show a gain in jobs in the monthly report from the state Labor Department. The department reported Thursday that employers cut 1,300 positions last month. But it noted the U.S. Census Bureau turned loose a large portion of its temporary work force in July, which drove up the losses in the government sector to 2,900.

The private sector in the state added 1,500 jobs last month, the department said. Manufacturing added 1,000 jobs. Retail added 1,300, and employment in the food and accommodations service sector climbed by 1,200. And for the second month in a row, the long-suffering construction industry saw a gain with 600 more jobs. The number of jobs in the financial activities sector was unchanged month over month.

On Thursday jet engine manufacturer Pratt & Whitney said that declining work is forcing it to lay off about a quarter of its hourly labor force at its Cheshire repair plant, prompting the workers' union to question whether the company is violating a federal court order barring it from moving jobs out of the state.

The subsidiary of United Technologies Corp. said it will lay off 129 hourly workers at its Cheshire plant, reducing the hourly labor force from 520 to 391.

The International Association of Machinists, which represents the workers, said in a statement that the layoffs "coincide with Pratt's original game plan for emptying the plant" before contract negotiations later this year.

The union said it will meet with its lawyer to determine whether the layoffs "represent actions by Pratt in contempt of the court's decision."

The East Hartford company said in a statement that the reduction is in "full compliance" with its contract with the Machinists and the federal court's ruling.

Despite the losses, state is up 1,500 jobs compared with a year ago and the unemployment rate is at 8.9 percent, a 0.1 percent increase compared with June. The national unemployment rate is 9.5 percent.

However, the state's weak economic recovery could sputter out, leading to more job losses, a University of Connecticut study said Thursday.

The possibility of significant cuts in government jobs to reduce an anticipated $3.4 billion state budget deficit in 2012 also likely would thwart any major recovery in employment, said the Connecticut Economic Outlook issued by the Connecticut Center for Economic Analysis at the university.

The state's unemployment rate has climbed steadily from 4.9 percent in December 2007, the start of the recession. It peaked at 9 percent in April.

"Dramatic revisions in federal economic data show that the Great Recession was significantly worse than previously thought," the report said. "Thus, Connecticut's economy probably has been weaker than previously recognized."

The Federal Reserve said Aug. 10 that the pace of the recovery "has slowed in recent months," downgrading its June outlook when it said the recovery was proceeding and the job market was improving. High unemployment, poor income growth, declining home values and tight credit are restraining the pace at which Americans are spending, usually a major source of powering the economy.

The report also criticized the state government, which has a $19 billion spending plan for 2012, for failing to collect useful data that could help researchers analyze economic changes.

"Connecticut has poor administrative data, knows little about the dynamics of firm creation or disappearance, and has not developed an integrated data system to track its general economic performance," the report said.

The director of the Connecticut Center for Economic Analysis, Fred Carstensen, said the state's government pursues policies that are ineffective and waste taxpayer money.

"We've not made the investments to find out what's going on," he said.

The study's author, Peter Gunther, a senior research fellow at the center, said some good news can be found in the otherwise grim economic outlook. Although Connecticut has not seen much job growth in 20 years, an analysis of job data suggests it has regained higher-wage jobs such as nursing while lower-wage employment shrank.

Still, the number of critical, high-pay occupations such as chief executive officers and lawyers has fallen, the report said.

The report cites continuing troubles in the housing industry, which led to the start of the recession. In the first six months of the year, Connecticut was the only state in the tri-state region including New York and New Jersey, where the number of housing permits declined for the fifth successive year, the report said.

The quarterly study is the second consecutive report detailing a gloomy outlook for Connecticut's economy. In May, the UConn study saw few prospects for a recovery and said that although there are signs of prospective growth, caution was warranted.

It urged state officials to reclaim more than $1 billion in unused research and development tax credits to build and equip manufacturing, pharmaceutical, bio-science and research space to create high-wage jobs.

Gunther repeated that recommendation, saying Republican Gov. M. Jodi Rell and the Democratic-controlled General Assembly can avoid a new surge in job losses by taking back the tax credits.

"The potential is there for some imaginative fiscal policy that does not put a big onus on the state," he said.

The governor's office did not immediately respond to a request for comment.