New Jersey's private-sector employers created an unexpected 6,600 jobs in October and November, an event that may herald an end to New Jersey's long if shallow recession. However, regional economists say the state's employment growth will be subdued over the next several years, remaining well below the explosive levels reached in the late 1990s.

With a gain of 3,900 jobs in October and 2,700 in November, the state's private sector pared its recession losses. As of November, private-sector employment was down 17,200 jobs for the year and down 28,900 from its June 2001 peak.

The brunt of the recession was shouldered by the state's manufacturing sector, which lost 31,300 jobs between June 2001 and November 2002, a 7 percent decline. The state's service sector added 500 jobs over the same period, thanks to a gain of 7,900 jobs in October and November, effectively cancelling out its earlier recession losses. Finally, the construction sector added 1,800 jobs over the 16-month period, an increase of just over 1 percent.
(See table below.)

In its December 2002 forecast, the Rutgers Economic Advisory Service (R/ECON) said it expects employment in New Jersey to expand by an average of approximately 40,000 new jobs a year through 2007, an annual growth rate of about 1 percent.

Rutgers economist Jim Hughes said the October-November employment uptick provides a "pretty good indication" that the recession ended in September 2002. However, he cautioned, "two months do not a definitive trend make."

R/ECON Director Nancy Mantell said she fully expects the recovery, which got underway in October, to continue with modest employment growth of about 40,000 jobs annually over the next several years.

Mantell and Hughes, speaking at a December 19 news conference in New Brunswick, said they do not expect the state to return to the heady growth rates of late 1990s, which produced an average annual gain of 90,000 jobs.

"During the forecast period (through 2007), the state will add about 40,600 jobs annually," Mantell said. "That's very modest growth and about 10 percent lower than the average annual growth during the post-World War II period."

Although the monthly unemployment rate may creep slightly higher next year, rising above its November peak of 5.6 percent, it should remain below the national rate and should average about 5.5 percent for the year. Mantell said the unemployment rate is a lagging economic indicator and typically rises in the first year of a recovery. As more people are drawn back into the job market, the pool of available labor expands faster than new jobs can be created.

For 2003, Mantell also forecast:

1. a 4.1% rise in real gross state product, following a 1.1% gain in 2002
2. a 4.3% rise in real personal income, following a 4% gain in 2002
3. consumer price inflation of 2.3%, versus an inflation rate of 2.4% in 2002

Employment in the state's manufacturing industries has been cut in half since reaching a peak of 800,000 in 1979. As of November, there were 420,200 goods-producing jobs in New Jersey, accounting for one out of every eight jobs in the private sector.

NJ Private-Sector Employment June 2001 through November 2002
	Total	Manufacturing	Construction	Service
Pre-Recession Peak (June-01)	3,432,700	451,500	161,000	2,818,600
November 2002	3,403,800	420,200	162,800	2,819,100
Change	-28,900	-31,300	1,800	500

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