In First Seven Months of 2001
NJ Loses 17,900 Private-Sector JobsSee Charts Below
New Jersey's private sector continued to shed jobs in July with a loss of 5,200 positions, extending what has become the state's worst employment downturn since 1992. Despite the employment decline, the New Jersey economy continues to exhibit strength and is not thought to be in a recession.
The NJ Department of Labor reports that the private sector as a whole, which includes all nongovernment employers, has shrunk by 17,900 jobs so far this year, a decline of one-half percentage point (See charts below.). Private sector payrolls now stand at 3,421,000.
Hardest hit was manufacturing, which lost 1,900 jobs in July, bringing that sector's employment deficit for the year to 14,800, a 3.2 percent decline. The reduction in manufacturing employment (from 458,700 in December to 443,900 in July) comes as no surprise. In fact, it represents a continuation of a long-term secular decline that has erased almost half of the state's factory payrolls since 1979.
Of greater concern are recent job losses in the diverse service sector, the energetic workhorse that powered the state's remarkable 1996-2000 expansion. The service industries incurred a modest loss of 3,500 jobs in the January-July period, a decrease of about one tenth of one percent. Before this year, growth in that sector had handily offset losses on the factory floor, allowing overall private sector employment to grow even as manufacturing payrolls shrank.
This year's employment decline is the worst since the first half of 1992, when New Jersey was just beginning to emerge from of the last recession. However, current losses are modest when compared to the depths of the 1989-92 recession period, when as many as 30,000 jobs vanished in a single month.
While the state's unemployment rate has crept up from its February low of 3.6 percent, it remains at historically low levels. The jobless rate reached 4.5 percent in June, a 21-month high, then fell back to 4 percent in July, mostly as a result of seasonal factors. (See chart below.)
New Jersey's employment decline, unanticipated by the state's leading regional economists at the start of the year, has caused forecasters to scale back their expectations for employment growth this year and next. In fact, Nancy Mantel, director of the Rutgers (University) Economic Advisory Service (R/ECON), said in a July news conference that the state is expected to create new jobs at a "snails pace" through 2002.
Despite this year's employment decline, Mantel and other forecasters believe the New Jersey, buoyed by other strengths, won't succumb to a recession. Like the nation, New Jersey continues to enjoy pockets of economic vigor, such as home sales and consumer spending, that are-at least for now-offsetting a severe manufacturing downturn and a disquieting plunge in business spending on capital equipment.
An area of continuing concern for New Jersey is corporate layoffs. When the nation's corporations announced a record number of layoffs in July, New Jersey found itself at ground zero. Due largely to the announcement by Lucent Technologies that it would cut 20,000 positions, the Garden State had the second largest number of cuts announced nationwide, behind California. Of the 205,975 layoffs announced, New Jersey companies claimed 26,378, or more than one in ten. However, many of the layoffs announced in New Jersey will take place in other states or countries.
Whether New Jersey's employment pullback will ease up, stay at current levels or deepen remains an open question. But if the current torrid pace of corporate layoffs continues unabated, the Garden State will undoubtedly suffer.
NJ Economy: Employment Decline Continues
