Nine months into the year, 2006 is shaping up to be one of New Jersey’s weakest non-recession years for private-sector employment growth in a quarter century. 

Private-sector employment grew by 2,100 jobs in September, bringing the total employment gain for the first nine months of the year to 14,700, an increase of less than one half percent, according to official State labor statistics.

At this rate of growth, the State’s private-sector employers can expect to add fewer than 20,000 new jobs in 2006.  This is just half of the state’s long-term, post-war average of about 40,000 new jobs a year.  It is also well below the average of about 70,000 new positions added annually in the expansions of the1980s and 1990s. (See Chart 1)

Unfortunately, weak job growth has been the rule, not the exception in the current expansion. 

New Jersey’s unemployment rate has also been on an upward trajectory over the last year.  Although it fell slightly to 5.2 percent in September from a 29-month high of 5.3 percent in August, it has been generally on the rise since hitting an expansion low of 4.2 percent in May 2005.  (The US rate in September was 4.6 percent.)

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

Using this benchmark, one finds that total private-sector employment in New Jersey — at 3,436,800 jobs in September —is now just 6,800 jobs above the previous record that was set nearly seven years ago. (See Chart 2)

Throughout the current expansion, the pattern of employment growth has been consistent, with gains in the construction trades and most service industries offsetting losses in manufacturing and information services, a sector dominated by telecommunications. (See Table)

Although the construction trades have eked out only a small gain (+ 800) in the first nine months of 2006, this sector is now 20,400 jobs above the pre-recession peak set in December 2000, a net employment gain of 13.5 percent.

Most of the gains in the service sector, which has seen a net gain of 93,100 jobs since December 2000 (a 3.3 percent increase), have come in education and health services (+ 68,600, up 13.6 percent) and leisure and hospitality (+ 41,800, up 13.8 percent).  Much smaller gains have been seen in two service sectors that were a source of powerful job growth in the 1990s expansion.  Financial services are up by 18,100 jobs since December 2000, an increase of 6.8 percent, and professional and business services are up by 2,700 jobs, a gain of just four-tenths of 1 percent.

The two service sectors that are still underwater since the onset of the recession are trade, transportation and utilities, a group that is down by 23,300 jobs or 2.6 percent since December 2000, and the telecommunications-dominated information services, which is down by 33,500 jobs or 26.3 percent.

Even as private-sector employment growth has slowed over the last six years and nine months, government employment has soared. 

Since December 2000, public-sector employment in New Jersey has expanded by a net 53,700 jobs, a 9 percent increase.  Most of that increase has been in State and local government, as federal government employment has remained largely stable.  This compares with a net gain of 6,800 private-sector jobs in the same nearly seven-year period, a gain of just two tenths of one percent.

In the first nine months of 2006, public sector employment has grown by 5,300 jobs, a gain of nearly 1 percent.  Over this same period, private-sector employment has increased by 14,700 jobs, an increase of four-tenths of 1 percent.

While national employment growth has been somewhat sluggish, it still outshines New Jersey.

Measuring employment growth from the mid-2003 recession low point, the nation’s private-sector employers have added 5.4 million private-sector jobs so far in this expansion, a gain of 5 percent.  In contrast, New Jersey’s private-sector employers have added 90,200 jobs, a gain of just 3 percent.

The employment gains have occurred over somewhat different time periods. In the nation as a whole, the current private-sector employment expansion has been underway for 38 months (August 2003 through September 2006).  New Jersey’s private-sector employment expansion has been underway since April 2003, a period of 42 months.

This report was prepared by Christopher Biddle, NJBIA Vice President of Communications, he can be reached at 609-393-7707, ext 227.

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