Employment in the State's private sector declined by 2,500 jobs in July, ending a hopeful run of job gains earlier in the year, according to information released by the NJ Department of Labor (DOL) in its monthly employment report.

“The July job loss comes as a disappointment,” NJBIA President Philip Kirschner said. “We had hoped that private-sector employment would continue to expand through the summer. Unfortunately, New Jersey continues to lag the nation in private-sector job growth. The state must do everything it can to improve the business climate in order to create more private-sector jobs.”

The July loss ended five months of modest gains, leaving the State with an overall increase in private-sector employment of 10,900 jobs so far this year, a gain of just three tenths of one percent.  If job growth remains stuck at this low level, 2006 would become one of the weakest non-recession years for employment growth in a quarter century.

New Jersey's unemployment rate rose to 5.1 percent in July, up from 4.9 percent in June. The unemployment rate has been rising fitfully since hitting an expansion low of 4.2 percent in May 2005.

Most of the losses came in the manufacturing sector, which saw employment decline by 2,800 jobs in July or a total of 6,000 for the year.  The construction sector lost 600 jobs last month, leaving it with a marginal gain of only 400 jobs for the year. (See Table 1)

Virtually all of this year's private-sector job gains have come in the service industries, which managed a small gain of 900 jobs in July and are up by 16,400 jobs for the first seven months of the year.

One way to gauge the magnitude of private-sector job growth in New Jersey is to compare current employment levels to the peak reached in December 2000, just before the onset of the last recession.

By this measure, total private-sector employment in New Jersey — at 3,433,000 jobs — is now only 3,000 jobs above the peak reached six and a half years ago before the onset of the 2000-2001 recession.  

The current private-sector employment expansion is also producing many fewer jobs than the two expansions that preceded it.  Since it got underway in April 2003, the current expansion (40 months old as of July) has produced an average of about 26,000 private-sector jobs a year.  In comparison, the 1990s expansion produced an average of 63,800 private-sector jobs a year and the 1980s, close to 90,000.

The rate of job creation also has been slower in New Jersey than in the nation as a whole. New Jersey was 41st in the nation in its rate of private-sector job growth in 2004.  And in 2005, private-sector employment grew by 1.3 percent in New Jersey, below the national job-growth rate of 1.6 percent.

Most of the job growth in the current expansion has come in the construction trades and in certain service industries, particularly in education and health, as well as in leisure and hospitality.  (See Table 2)

Since December 2000, construction employment has grown by 20,000 jobs for a gain of 13.2 percent. Education and health services have added 67,500 jobs for a gain of 13.4 percent, and companies in the leisure and hospitality industries have added 40,900 jobs, an increase of 13.5 percent.

But the professional and business services sub-sector, an important engine of job growth in the 1990s, has lagged. Modest gains over the last three and a half years have failed to offset sharp recession losses, leaving that sector only 500 jobs above its pre-recession peak of 602,300 jobs.

Manufacturing employment has declined steadily throughout the period although losses have moderated over the last two years.  The State's manufacturers now employ 317,200 people, 104,800 fewer than they employed six and a half years ago.

Another sector that has taken a severe hit is information services, which includes computer and telecommunications services. This sector has lost 32,500 jobs since December 2000, one quarter of the pre-recession employment total of 127,500.

Even as employment growth in the private sector has slowed over the last six and a half years, government employment has soared.  Since December 2000, public-sector employment in New Jersey has expanded by a net 53,200 jobs, a 9 percent increase.  As of July, this had brought total employment at all levels of government to 647,200. (Virtually all of that increase has been in state and local government; federal government employment has remained largely stable.)

Thus, over the last six and a half years, state and local governments have added more jobs than the private sector (a net gain of 53,200 vs. 3,000), and over the same period they have achieved a much higher rate of job growth (9 percent vs. one-tenth of a percent).

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