New Jersey sustained a loss of 4,200 private-sector jobs in June, bringing the State’s total private-sector loss to 14,400 jobs in the first half of the year, according to preliminary data issued by the NJ Department of Labor ( See chart).

The loss of jobs marks an end to the State's nearly five-year employment expansion, which was one of the weakest on record. 

"It's no longer a question of whether New Jersey is entering a downturn. We’re there," said NJBIA President Philip Kirschner.  "Any hope of a comeback in private-sector job growth this year has pretty much vanished."

Total private-sector employment in New Jersey is now 3,419,400, a half percentage point below the peak of 3433.8 reached in December 2007 and, even more significantly, 10,600 jobs less than the number of private-sector jobs New Jersey had seven years ago!

Every major sector of the State economy, except government, lost ground in the first half.  Manufacturing lost 7,700 jobs in the first half, a decline of 2.5 percent.  Construction lost 3,600 jobs, a decline of 2.1 percent, and the service sector lost 3,200 jobs, a decline of 0.1 percent.  In the public sector (government), 300 jobs were added, a gain of 0.05 percent. 

In the meantime, the State's unemployment rate has risen steadily, from a low of 4.2 percent in the last half of 2007 to 5.4 percent in May.  The rate fell back to 5.3 percent in June.

Regional economists point to the loss of 14,400 jobs in the first half as evidence that New Jersey has fallen into a recession.  The current employment contraction also follows one of the weakest periods of economic growth in more than half a century.

The recently ended employment expansion, which lasted for nearly five years, began in March 2003 and ended in December 2007.  An average of 15,300 private-sector jobs was added in each of those five years.  This is less than a quarter of the average of 66,600 jobs added annually in the 1993-2000 expansion.

New Jersey has also lagged in the nation in its rate of employment growth.  A Rutgers University analysis (Reversal of Economic Fortune, April 2008, Hughes and Seneca) finds that New Jersey was 41st in its rate of job creation over the past two years.  (The nation as a whole added 2.74 million-private sector jobs in 2006 and 2007, for a gain of 2.4 percent.  New Jersey added 31,000 jobs in the same period, a gain of 0.9 percent.)

In fact, employment has been growing so slowly in New Jersey that when the current expansion ended in December 2007, private-sector employment had surpassed the previous employment record, set in December 2000, by only 3,800 jobs, an increase of just one tenth of one percent.  (This is the net difference between the 84,800 jobs lost in the 2001-2003 downturn and the 88,600 jobs added in the 2003-2007 expansion.)

The 2003-2007 expansion was also marked by tremendous growth in the number of government jobs in New Jersey (most of them State and local).  Total statewide employment grew by 58,600 jobs in this period, but only 3,800 of those jobs were added in the private sector.  The remaining 54,800 jobs, or 93 percent of the total, were added in the public sector. (See "Winners and Losers" Table)

Looking ahead, regional economists say New Jersey can expect to feel the full weight of a national recession.  In fact, they note that total employment in 2007 was essentially flat, signaling the onset of the 2008 contraction.

The Rutgers Economic Advisory Service (R/ECON), which issues a closely watched quarterly forecast, said New Jersey has already entered a recession.  R/ECON Director Nancy Mantell said she believes the recession will cost the State about 31,000 jobs before it ends in the second quarter of 2010.

"We expect further job losses here the next two years, but anticipate adding 250,000 jobs over the course of the next ten years," Mantell said in presenting her forecast on July 16.