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KNOXVILLE, Tenn.– A lethargic labor market is dragging down the state’s economy, a University of Tennessee economic report says.

 The report of Tennessee’s leading economic indicators says the state isn’t keeping pace with national economic growth.

The report, from UT-Knoxville’s Center for Business and Economic Research, is based on economic activity in March and activity projected in six to nine months.

 “Tennessee is not riding the crest of continued economic expansion that is taking place in the national economy,” Dr. Matt Murray, CBER economist, said in an interview.

Murray said Tennessee continues to sustain job losses in the manufacturing sector of the economy that produces non-durable goods such as textiles, apparel and leather products.

 “We are racking up terrible losses in non-durable goods manufacturing,” Murray said. “There doesn’t appear to be any end in sight.”

 The report in the June edition of the “Tennessee Economic Overview” cited a 1.7 percent decrease (seasonally adjusted) for March non-agricultural employment and a 8.8 percent drop (also adjusted) in manufacturing employment.

 Tennessee’s overall unemployment rate in March was 5.2 percent — same as the national figure — but Murray said the non-durable sector is down.

 “If there’s anything frustrating about the falling unemployment rate for the national economy, it is that the Tennessee economy is not moving in the same direction,” Murray said.

Tennessee’s economic expansion appears to be approaching a crucial time and should be monitored closely for the next several months, the overview says.

Other indications of a “stagnating labor market” included an increase over February of 9,200 claims for unemployment insurance payments.

 Other March indicators included:

 — A seasonally adjusted 26.3 percent drop in the state’s commercial and industrial electrical consumption.

 — A 18.1 percent decline in seasonally adjusted taxable sales.

 Contact: Dr. Matt Murray (423-974-5441)