Bit of High-Tech Gloom (Boston Herald)

Some see slump, others set to hire

By Jay Fitzgerald

Massachusetts is seeing the first hints of a slowdown in the high-technology sector that’s been the engine of recent economic growth, a new report released yesterday indicates.

Boston-area business activity in general has been “softening” over the past few months, particularly in the retail, manufacturing and housing sectors, according a Federal Reserve “Beige Book” report based on surveys of industry leaders.

The Fed report added that some software and information technology firms - which have generated thousands of new jobs in recent years in Massachusetts - are now seeing revenue growth slow a bit, the report said.

“A few firms cite delays in signing contracts, which they take as a sign that clients are uncertain about the economy,” the report said.

But half of tech firms surveyed said they plan to add workers to their payrolls, as their business remains steady, the report said.

Mark Zandi, an economist at Moody’s Economy.com, said the Fed report is concerning because high-tech firms have generally held up well during the recent economic turmoil caused by the subprime-mortgage meltdown.

But Zandi and and Chris Anderson, president of the Massachusetts High Technology Council, said the Fed report may reflect those firms dealing with large financial institutions that are reeling from bad bets on subprime mortgages.

“It will remain a source of growth, but it’s struggling a bit due to the problems within the financial sector,” Zandi said of the tech sector.

The defense, life-sciences and other technology sectors remain strong, said Anderson.

Nationally, the Fed report suggested that the U.S. economy is slowing, but it’s avoiding an out-right contraction - confirming Fed Chairman Ben Bernanke’s recent prediction that the economy may avoid a deep downturn.