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New Jersey's recession deepened in 2009 as individual companies, faced with plunging sales and profits, made dramatic cuts in spending and employment.

The 1,400 New Jersey employers who painted this picture in their responses to NJBIA’s annual fall survey also expressed little hope for a quick turnaround in the year ahead.

Forty-eight percent of survey respondents reduced employment at their companies over the past year, while only 8 percent hired more workers, making 2009 the worst year in a quarter century for this employment indicator.  Most respondents said they do not plan to hire additional workers over the next 12 months, leaving an employment outlook that is flat.
                                                    
Survey measures of sales, profits, and spending at individual companies fell to record low levels in 2009, and a majority of companies said they expect business conditions to remain at current low levels or to deteriorate in 2010.  Most also said they expect to keep a tight lid on spending.

These are among the major findings of the New Jersey Business & Industry Association's 2010 Business Outlook Survey.

"Our member companies don't believe the economy is going to bounce back quickly from this terrible recession we're in," said NJBIA President Philip Kirschner. "Another challenging year is certainly in store for New Jersey employers."

The 1,400 NJBIA member companies participating in the survey represented every major industry and all 21 New Jersey counties.  Eighty-two percent of respondents were small companies with one to 49 employees. The survey, now in its 51st year, remains the state’s longest running and most reliable barometer of business opinion about present and future business conditions in New Jersey.

The survey findings bolster the view that this is New Jersey’s worst recession since the Great Depression.  Among the survey findings:

Sales, Profits & Spending

Sales, profits, and spending at individual companies fell in 2009 to the lowest levels since this survey question was first asked 12 years ago.  The outlook for these core measures of individual company performance remains at low recession levels. 

Sales - Seven in ten companies said their sales revenues shrank in 2009, with two thirds of this group reporting double-digit declines.  Nearly 41 percent expect their sales to improve moderately in the year ahead, 32 percent expect sales to fall, and 28 percent expect little or no change.  This leaves a net 9 percent of companies anticipating sales growth in 2010. While this outlook is more positive than negative, it is marginally worse than it was one year ago. (See Chart 2)

Profits - Seven in ten companies said their profits fell in 2009, with two-thirds of this group reporting double-digit declines. The 2010 outlook for profits is flat, with 36 percent of companies expecting their profits to rise, 34 percent expecting them to fall, and 30 percent expecting no change.  The net outlook for profit growth (+2 percent of all respondents) is marginally lower than it was last year (+5 percent). (See chart 2)

Spending - Seven in ten companies spent less on purchases in 2009, with two-thirds of this group reporting double-digit spending cuts. Thirty-six percent anticipate keeping their purchases at current levels in 2010, about 35 percent anticipate spending less, and 30 percent expect to spend more. As shown on Chart 2, this leaves a net purchasing outlook of -5 percent, which is weaker than it was one year ago.

Employment

The percentage of companies reducing employment hit a record high in 2009, as explained on page 1 of this news release.  The outlook for private-sector employment remains extremely weak.  Sixty-seven percent expect to keep employment at current levels, while 16 percent anticipate adding jobs, and 17 percent anticipate making further employment reductions. This leaves a net employment outlook of -1 percent, which is the third weakest level in 26 years (only the 2009 and 1991 outlooks were weaker).

For the first time in five years, the overall outlook for companies’ own industries has climbed into positive territory, as shown in Chart 5.

Thirty-four percent of companies believe their industry conditions will improve in 2010, 35 percent believe conditions will remain about the same, and 31 percent believe conditions will deteriorate. The net percentage expecting a change for the better, as shown in Chart 5, is 3 percent.

The move into positive territory is small, but it is positive nonetheless. Importantly, the outlook for four industries hit hardest by this recession - namely housing construction, manufacturing, retail sales and transportation - has improved the most.

NJ Business Climate

Business confidence in New Jersey as a place for business expansion has continued to erode. Eleven percent of survey respondents said New Jersey is a good place for expansion of their business facilities, a record low, and down from 50 percent just nine years ago.
                                 
Conversely, 52 percent said New Jersey is a poor place for expansion of their business facilities, and 37 percent said New Jersey is fair-to-average.

Respondents said the overall cost of doing business in New Jersey is their most troublesome problem, eclipsing healthcare costs, had been the top problem for many years.
 
Asked to compare New Jersey to other states, 91 percent of respondents said New Jersey is worse than other states in its taxes and fees. Large majorities also said New Jersey is worse in controlling government spending (86%), attracting new business (79%), controlling healthcare costs (77%), its attitude toward business (71%), the cost of regulatory compliance (67%), and controlling labor costs (65%).  On the positive side of the ledger, New Jersey continued to get better or comparable marks compared with other states for the quality of its public schools, the quality of its workforce, protecting the environment, and as a place to live.