JACKSON (AP) — Economists say growth and employment should increase in Mississippi next year, led by an improved housing market and an increase in home construction.

“We’re hoping the budding housing recovery will carry us forward.” Greg Daco, an economist with IHS Global Insight, said at Tuesday conference held by the College Board in Jackson.

Mississippi’s economy is predicted to grow 1.6 percent in 2013, compared to an expansion of only 0.5 percent this year. Payroll employment in the state should grow 1 percent, compared to staying flat or barely shrinking in 2012. Mississippi will slightly lag the nation in both output and employment growth.

“Overall, we’re predicting a slow growth rate, but positive,” said College Board economist Marianne Hill.

Though Mississippi’s economy noticeably dipped in the middle of this year, economic indicators began to improve in August.

“We seem to be coming out of it,” Hill said.

Nationwide, only half the jobs lost in the recession have been recovered. IHS Global Insight expects the national economy to continue adding 175,000 to 200,000 jobs a month over the next four years.

The picture is worse in Mississippi. College Board Economist Darrin Webb said payrolls could fall in 2012 for the fifth straight year, an unprecedented decline dating to the beginning of federal figures in 1939.

Hill also noted problems with the slow growth of businesses and a shrinking business and professional sector.

“Is there more that can be done to support employment?” she asked. “I think there is.”

The economists assume Congress and President Obama will at least temporarily avoid the year-end package of spending cuts and tax increases being called the “fiscal cliff.” If not, the nation and state could see a brief recession in 2013’s first half.

“We expect a last-minute deal for the fiscal cliff, not a long-term one,” Daco said.

He said that further troubles in Europe could still drag down the U.S. economy, especially if they mounted into a financial crisis.

Daco said housing is affordable and there’s a lot of pent-up demand. But it’s still hard to borrow money and there’s a backlog of foreclosures and empty houses that need to be cleared away.

Housing starts in Mississippi were up to 6,000, said Marty Milstead of the Homebuilders Association of Mississippi, about half what Milstead considers normal. He said home construction remained depressed on the coast, but is beginning to pick up in DeSoto County. One strong area is southern Madison County.

“I know in the Gluckstadt area, the houses are really selling,” Milstead said.